<PAGE> 1
Filed pursuant to 424(b)(3)
Reg Nos. 333-42792, 333-42792-01
and 333-42792-02
Prospectus
[NTL LOGO]
NTL COMMUNICATIONS CORP.
7% CONVERTIBLE SUBORDINATED NOTES DUE 2008
NTL INCORPORATED
SHARES OF COMMON STOCK
- Selling securityholders who are identified in this prospectus may offer and
sell an indeterminate number of:
-- 7% Convertible Subordinated Notes Due
2008 of NTL Communications Corp.
-- shares of common stock of NTL Incorporated
by using this prospectus.
- The offering price for the convertible notes is not set but will be determined
according to negotiation between a selling securityholder and the prospective
purchaser. The offering price for the common stock will be negotiated or, if
sold on the Nasdaq National Market, at prevailing market price.
- NTL Incorporated's common stock is traded on the Nasdaq National Market under
the symbol NTLI. On August 29, 2000, the last reported sales price of the
common stock was $39.6875 per share. There is no public market for the
convertible notes, and we do not intend to apply to the Nasdaq National Market
or any other securities exchange to list the convertible notes.
WE URGE YOU TO CAREFULLY READ THE RISK FACTORS SECTION BEGINNING ON PAGE 4,
WHERE WE DESCRIBE SPECIFIC RISKS ASSOCIATED WITH THESE SECURITIES, BEFORE YOU
MAKE YOUR INVESTMENT DECISION.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is August 30, 2000
<PAGE> 2
EXPLANATORY NOTE REGARDING CORPORATE RESTRUCTURING OF NTL
On April 1, 1999, NTL Incorporated completed a corporate restructuring to
create a new holding company structure. The restructuring was accomplished
through a merger under section 251(g) of the Delaware General Corporation Law.
At the effective time of the merger, all stockholders of NTL Incorporated became
stockholders in the new holding company and NTL became a wholly-owned subsidiary
of the new holding company. The new holding company took the NTL Incorporated
name and the old NTL Incorporated was renamed NTL Communications Corp.
On May 18, 2000 NTL Incorporated again completed a corporate restructuring
to create a new holding company structure. The restructuring was accomplished
through a merger under section 251(g) of the Delaware General Corporation Law.
At the effective time of the merger, all stockholders of NTL Incorporated became
stockholders in the new holding company and NTL became a wholly owned subsidiary
of the new holding company. The new holding company took the NTL Incorporated
name and the old NTL Incorporated was renamed NTL (Delaware), Inc.
The new holding company's stock trades under the same NTLI symbol on the
Nasdaq National Market with the same CUSIP number. In the merger, all
outstanding shares of old NTL Incorporated were converted into shares of the new
holding company with the same voting powers, designations, preferences and
rights, and the same qualifications, restrictions, and limitations, as the
shares of old NTL Incorporated.
At the effective time of the merger, the only material asset of the new
holding company was the capital stock of NTL (Delaware), Inc. and it had no
material liabilities.
Prior to the restructuring, the indenture pursuant to which the convertible
notes were issued was supplemented by a first supplemental indenture, dated
March 31, 1999, between NTL Incorporated, NTL Communications Corp. and the
trustee, as further supplemented by a second supplemental indenture, dated March
16, 2000, between NTL Incorporated, NTL Communications Corp. and the trustee,
and as further amended by a third supplemental indenture, dated May 17, 2000
between NTL Incorporated, NTL Communications Corp. and NTL Holdings Inc. The
third supplemental indenture provides that NTL Incorporated, NTL (Delaware),
Inc. and NTL Communications Corp. are each joint and severally liable for the
obligations to pay the principal of, premium, if any, liquidated damages, if
any, offer amount, if any, and interest on, the convertible subordinated notes
due 2008.
------------------------
You should rely only on the information contained in this prospectus. We
have not authorized any other person to provide you with different information.
If anyone provides you with different or inconsistent information, you should
not rely on it. We are not making an offer of the securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the information
appearing in this prospectus is accurate as of the date on the front cover of
this prospectus only. Our business, financial condition, results of operations
and prospects may have changed since that date.
------------------------
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................... 1
Risk Factors................................................ 4
Use of Proceeds............................................. 13
Description of the Convertible Notes........................ 14
Registration Rights......................................... 40
United States Federal Tax Considerations.................... 42
Selling Securityholders..................................... 44
Plan of Distribution........................................ 45
Legal Matters............................................... 47
Experts..................................................... 47
Enforceability of Civil Liabilities......................... 48
Where You Can Find More Information About Us................ 49
</TABLE>
<PAGE> 4
PROSPECTUS SUMMARY
This summary highlights information about us which is contained elsewhere
or incorporated by reference in this prospectus. This summary may not contain
all the information that is important to you. You should read the entire
prospectus, including the financial statements and related notes, before making
an investment decision. References to NTL, we, us or our in this prospectus,
mean NTL Incorporated and its consolidated subsidiaries, except where the
context clearly refers to NTL Incorporated exclusively or as otherwise provided
herein.
ABOUT NTL
NTL, through its subsidiaries, owns and operates broadband communications
networks, for telephone, cable television and Internet services and transmission
networks for television and radio in the United Kingdom, the Republic of
Ireland, France, Switzerland and Australia. NTL's predominant lines of business
are residential services, national telecommunications services and broadcast
transmission and tower services. Residential services include telephony, cable
television, Internet access and interactive services. National
telecommunications services include business telephony, national and
international carrier telecommunications, Internet services and radio
communications services. Broadcast transmission and tower services include
digital and analog television and radio broadcasting, tower and site leasing and
satellite communications services.
1
<PAGE> 5
THE OFFERING
Securities offered............ Up to $167,603,000 aggregate principal amount
of 7% convertible subordinated notes due 2008
of NTL Communications Corp. and up to 4,275,586
shares of common stock of NTL Incorporated,
plus such indeterminate number of additional
shares of common stock that may be issued from
time to time upon conversion of the convertible
notes by reason of adjustment to the conversion
price in certain circumstances described
herein. The convertible notes are also
obligations of NTL Incorporated and NTL
(Delaware), Inc.
Maturity...................... December 15, 2008.
Interest payment dates........ June 15 and December 15 of each year,
commencing June 15, 1999.
Conversion.................... The convertible notes, unless previously
redeemed, are convertible at the option of the
holder of those notes at any time prior to
maturity into shares of common stock of NTL
Incorporated at a conversion price of $39.20
per share, subject to adjustment in certain
events. See "Description of the convertible
notes -- conversion."
Optional redemption........... The convertible notes will be redeemable, in
whole or from time to time in part, at NTL
Communications Corp.'s option, on at least 30
but not more than 60 days' prior notice, at any
time on or after December 15, 2001, at the
redemption prices set forth in this prospectus
together with accrued and unpaid interest and
liquidated damages, if any, to the date of
redemption. See "Description of the convertible
notes -- optional redemption."
Subordination................. The convertible notes are general unsecured
obligations of NTL Communications Corp., NTL
(Delaware), Inc. and NTL Incorporated and are
subordinate in right of payment to all of NTL
Communications Corp.'s, NTL (Delaware) Inc.'s
and NTL Incorporated's existing and future
senior debt as we define it in this prospectus.
In addition, the convertible notes are
effectively subordinated to all existing and
future liabilities of their respective
subsidiaries, partnerships and affiliated joint
ventures, including trade payables.
2
<PAGE> 6
Change of control............. Upon a change of control as we define it in
this prospectus, holders of the convertible
notes will have the right, subject to some
restrictions and conditions, to require NTL
Communications Corp., NTL (Delaware), Inc. and
NTL Incorporated to repurchase all or any part
of the convertible notes at a purchase price
equal to 101% of the principal amount of those
notes together with accrued and unpaid interest
and liquidated damages, if any, to the date of
repurchase.
NTL Communications Corp., NTL (Delaware), Inc.
and NTL Incorporated may not have sufficient
funds or the financial resources necessary to
satisfy, or may be precluded by the terms
governing their indebtedness from satisfying,
their obligations to repurchase the convertible
notes and other debt that may become repayable
upon a change of control.
Use of proceeds............... The selling securityholders will receive all of
the net proceeds from the sale of the offered
securities sold pursuant to this prospectus. We
will not receive any proceeds from sales by the
selling securityholders of the offered
securities.
United States federal tax
considerations............. There are various federal income tax
considerations associated with purchasing,
holding and disposing of the convertible notes.
See "United States federal tax considerations."
3
<PAGE> 7
RISK FACTORS
You should consider carefully all of the information set forth and
incorporated by reference in this prospectus. See "Where you can find more
information about us." You should particularly evaluate the following risks
before deciding to purchase the convertible notes or the common stock issuable
on conversion of the convertible notes.
THE CONVERTIBLE NOTES ARE SUBORDINATED TO THE EXISTING AND FUTURE SENIOR DEBT OF
NTL INCORPORATED, NTL (DELAWARE), INC. AND NTL COMMUNICATIONS CORP.
Our obligations under the convertible notes are unsecured and are
subordinated in right of payment to all our existing and future senior debt as
that term is defined in the indenture governing the convertible notes. This
means that we cannot make any payments on the convertible notes if we default on
a payment of any of those senior debts. In the event of the bankruptcy,
liquidation or dissolution of NTL Incorporated, NTL (Delaware), Inc. or NTL
Communications Corp., our assets would be available to pay our obligations under
the convertible notes only after all payments have been made on our senior debt.
Our available assets may be insufficient to pay all of our creditors. You may
receive nothing and are likely to receive proportionately less than the holders
of our senior debt.
OUR SUBSTANTIAL LEVERAGE COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH AND PREVENT
US FROM FULFILLING OUR OBLIGATION UNDER THE NOTES
We are and, for the foreseeable future will continue to be, highly
leveraged. The agreements which govern our existing indebtedness also allow us
to assume additional debt. If our substantial indebtedness adversely affects our
financial health we may not be able to fulfill our obligations under the notes.
Our substantial indebtedness could adversely affect our financial health
by, among other things:
- increasing our vulnerability to adverse changes in general economic
conditions or increases in prevailing interest rates particularly if any
of our borrowings are at variable interest rates,
- limiting our ability to obtain the additional financing we need to
operate, develop and expand our business, and
- requiring us to dedicate a substantial portion of our cash flow from
operations to service our debt, which reduces the funds available for
dividends, operations and future business opportunities.
IN SOME CIRCUMSTANCES INVOLVING A CHANGE OF CONTROL OF NTL COMMUNICATIONS CORP.,
WE WILL BE REQUIRED TO REPURCHASE SOME OF OUR INDEBTEDNESS INCLUDING THE
CONVERTIBLE NOTES -- IF THIS OCCURS, WE MAY NOT HAVE THE FINANCIAL RESOURCES
NECESSARY TO MAKE THOSE REPURCHASES
We may under some circumstances involving a change of control of NTL
Communications Corp. be obligated to offer to repurchase outstanding debt
securities,
4
<PAGE> 8
including the convertible notes, before maturity. We cannot assure you that we
will have available financial resources necessary to repurchase those securities
in those circumstances.
THE ANTICIPATED CONSTRUCTION COSTS OF OUR NETWORK WILL INCREASE AS A RESULT OF
OUR RECENT ACQUISITIONS AND WILL REQUIRE SUBSTANTIAL AMOUNTS OF ADDITIONAL
FUNDING
Following our recent acquisitions, our capital expenses and cost of
operations for the development, construction and operation of our networks will
significantly increase. We estimate that significant amounts of additional
funding will be necessary to meet these capital expenditure and operational
requirements.
We cannot be certain that:
- we will be able to obtain additional financing with acceptable terms;
- we will satisfy conditions precedent to advances under future credit
facilities; or
- we will be able to generate sufficient cash from operations to meet
capital requirements, debt service and other obligations when required.
We do not have any firm additional financing plans to address the factors
enumerated above.
WE WILL REQUIRE ADDITIONAL FINANCING BECAUSE WE DO NOT EXPECT TO GENERATE
SUFFICIENT CASH FLOW TO REPAY AT MATURITY ALL OF OUR OUTSTANDING INDEBTEDNESS
We anticipate that we will not generate sufficient cash flow from
operations to repay at maturity all of our outstanding indebtedness. As a
result, we will have to consider, among other things:
- refinancing all or portions of that indebtedness,
- seeking modifications to the terms of that indebtedness, and
- seeking additional debt financing, which may require us to obtain the
consent of some of our lenders.
We cannot be certain that we will succeed in executing any of these
measures.
WE CANNOT BE CERTAIN THAT WE WILL BE SUCCESSFUL IN INTEGRATING ACQUIRED
BUSINESSES INTO OURS, OR THAT WE WILL REALIZE THE BENEFITS WE ANTICIPATE FROM
ANY ACQUISITION
We will continue to consider strategic acquisitions and combinations that
involve operators or owners of licenses to operate cable, telephone, television
or telecommunications systems or services and related businesses. If
consummated, some of these transactions would significantly alter our holdings
and might require us to incur substantial indebtedness. We cannot assure you
that, with respect to the recent acquisitions, as well as any future
acquisitions, that:
- we will realize any anticipated benefits;
- we will successfully integrate the businesses with our operations; or
- we will manage such integration without adversely affecting NTL.
5
<PAGE> 9
NTL INCORPORATED, NTL (DELAWARE), INC. AND NTL COMMUNICATIONS CORP. ARE HOLDING
COMPANIES THAT ARE DEPENDENT UPON CASH FLOW FROM THEIR SUBSIDIARIES TO MEET
THEIR OBLIGATIONS -- THEIR ABILITY TO ACCESS THAT CASH FLOW MAY BE LIMITED IN
SOME CIRCUMSTANCES
NTL Incorporated, NTL (Delaware), Inc. and NTL Communications Corp. are
holding companies with no independent operations or significant assets other
than their investments in and advances to their subsidiaries and affiliated
joint ventures. The terms of existing and future indebtedness of their
subsidiaries may limit the payment of dividends, loans and other distributions
to them by their subsidiaries. NTL Incorporated, NTL (Delaware), Inc. and NTL
Communications Corp. depend upon the receipt of sufficient funds from their
subsidiaries and affiliated joint ventures to meet their obligations, including
their obligations on the convertible notes.
Your right to receive payments on the convertible notes could be adversely
affected in the event of a bankruptcy of any of their subsidiaries. Following
the liquidation of a subsidiary or joint venture of NTL Incorporated, NTL
(Delaware), Inc. or NTL Communications Corp., the creditors of that subsidiary
or joint venture will generally be entitled to be paid in full before NTL
Incorporated, NTL (Delaware), Inc. or NTL Communications Corp., as the case may
be, is entitled to a distribution of any assets in the liquidation.
WE HAVE HISTORICALLY INCURRED LOSSES AND GENERATED NEGATIVE CASH FLOWS AND
CANNOT ASSURE YOU THAT WE WILL BE PROFITABLE IN THE FUTURE
Construction and operating expenditures have resulted in negative cash
flow, which we expect will continue at least until we establish an adequate
customer base. We also expect to incur substantial additional losses. We cannot
assure you that we will achieve or sustain profitability in the future. Failure
to achieve profitability could diminish our ability to sustain our operations
and obtain additional required funds. In addition, a failure to achieve or
sustain profitability would adversely affect our ability to make required
payments on our indebtedness, including the convertible notes.
NTL COMMUNICATIONS CORP. AND NTL (DELAWARE), INC. HAVE HISTORICALLY HAD A
DEFICIENCY OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS AND THEIR EARNINGS IN THE FUTURE MAY NOT BE
SUFFICIENT TO COVER THOSE FIXED CHARGES, INCLUDING OUR OBLIGATIONS ON THE
CONVERTIBLE NOTES
For the six months ended June 30, 2000 and the years ended December 31,
1999, 1998, 1997, 1996 and 1995, NTL Communications Corp.'s earnings were
insufficient to cover fixed charges by approximately $798.9 million, $783.7
million, $535.0 million, $350.9 million, $268.9 million and $112.4 million,
respectively. NTL Communications Corp.'s earnings for the years ended December
31, 1999, 1998 and 1997 were insufficient to cover combined fixed charges and
preferred stock dividends by approximately $796.8 million, $553.7 million and
$362.9 million, respectively.
For the six months ended June 30, 2000 and the years ended December 31,
1999, 1998, 1997, 1996 and 1995, NTL (Delaware), Inc.'s earnings were
insufficient to cover
6
<PAGE> 10
fixed charges by approximately $1.0 billion, $809.8 million, $535.0 million,
$350.9 million, $268.9 million and $112.4 million, respectively. NTL (Delaware),
Inc.'s earnings for the six months ended June 30, 2000 and for the years ended
December 31, 1999, 1998 and 1997 were insufficient to cover combined fixed
charges and preferred stock dividends by approximately $1.0 billion, $883.5
million, $553.7 million and $362.9 million, respectively.
For the six months ended June 30, 2000 and the years ended December 31,
1999, 1998, 1997, 1996 and 1995, NTL Incorporated's earnings were insufficient
to cover fixed charges by approximately $1.1 billion, $809.8 million, $535.0
million, $350.9 million, $268.9 million and $112.4 million, respectively. NTL
Incorporated's earnings for the six months ended June 30, 2000 and for the years
ended December 31, 1999, 1998 and 1997 were insufficient to cover combined fixed
charges and preferred stock dividends by approximately $1.1 billion, $883.5
million, $553.7 million and $362.9 million, respectively.
Fixed charges consist of interest expense, including capitalized interest,
amortization of fees related to debt financing and rent expense deemed to be
interest. Our earnings in the future may not be sufficient to cover those fixed
charges, including our obligations associated with the convertible notes.
WE ARE SUBJECT TO SIGNIFICANT COMPETITION, WHICH WE EXPECT TO INTENSIFY, IN EACH
OF OUR BUSINESS AREAS -- IF WE ARE UNABLE TO COMPETE SUCCESSFULLY OUR FINANCIAL
HEALTH COULD BE ADVERSELY AFFECTED
We face significant competition from established and new competitors in
each of our businesses. As existing technology develops and new technologies
emerge, we believe that competition will intensify in each of these business
areas, particularly business telecommunications and the Internet. Some of our
competitors have substantially greater financial and technical resources than we
do. If we are unable to compete successfully our financial condition and results
of operations could be adversely affected.
OUR PRINCIPAL BUSINESSES ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION,
INCLUDING PRICING REGULATION, WHICH MAY CHANGE IN A MANNER THAT ADVERSELY
EFFECTS US
Our principal business activities in the UK are regulated and supervised by
various governmental bodies. Changes in laws, regulations or governmental policy
or the interpretations of those laws or regulations affecting our activities and
those of our competitors, such as licensing requirements, changes in price
regulation and deregulation of interconnection arrangements, could have a
material adverse effect on us.
In addition, we are also subject to regulatory initiatives of the European
Commission. Changes in EU Directives may reduce the range of programing and
increase the costs of purchasing television programming or require us to provide
access to our cable network infrastructure to other service providers, which
could have a material adverse effect on us.
7
<PAGE> 11
OUR BROADCAST SERVICES BUSINESS IS DEPENDENT UPON SITE SHARING ARRANGEMENTS WITH
OUR PRINCIPAL COMPETITOR
As a result of, among other factors, a natural shortage of potential
transmission sites and the difficulties in obtaining planning permission for
erection of further masts, the Castle Tower Corporation Consortium and NTL have
made arrangements to share a large number of sites. We cannot assure you that
the site sharing arrangements will not be terminated. Termination of the site
sharing arrangements would have a material adverse effect on us.
Under the present arrangements, one of the parties is the owner, lessor or
licensor of each site and the other party is entitled to request a license to
use specified facilities at that site. Each site license granted pursuant to the
site sharing agreement is for an initial period expiring on December 31, 2005,
subject to title to the site and to the continuation in force of the site
sharing agreement. Each site sharing agreement provides that, if requested by
the sharing party, it will be extended for further periods. Either party may
terminate the agreement by 5 years' notice in writing to the other expiring on
December 31, 2005 or at any date which is a date 10 years or a multiple of 10
years after December 31, 2005.
FAILURE TO MANAGE OUR GROWTH AND EXPANSION COULD HAVE A MATERIAL ADVERSE EFFECT
ON US
We have experienced rapid growth and development in a relatively short
period, and we plan to meet our strategic objectives and regulatory milestones.
Management of that growth will require, among other things:
- stringent control of construction and other costs,
- continued development of our financial and management controls,
- increased marketing activities, and
- the training of new personnel.
Failure to manage our rapid growth and development successfully could have
a material adverse effect on us.
WE ARE DEPENDENT UPON A SMALL NUMBER OF KEY PERSONNEL
A small number of key executive officers manage our businesses, and the
loss of one or more of them could have a material adverse effect on us. We
believe that our future success will depend in large part on our continued
ability to attract and retain highly skilled and qualified personnel. We have
not entered into written employment contracts or non-compete agreements with,
nor have we obtained life insurance policies covering, those key executive
officers. Some of our senior managers also serve as members of senior management
of other companies in the telecommunications business which may reduce the
amount of time they are able to dedicate to our businesses.
8
<PAGE> 12
THE TELECOMMUNICATIONS INDUSTRY IS SUBJECT TO RAPID TECHNOLOGICAL CHANGES AND WE
CANNOT PREDICT THE EFFECT OF ANY CHANGES ON OUR BUSINESSES
The telecommunications industry is subject to rapid and significant changes
in technology and we cannot predict the effect of technological changes on our
businesses. However, the cost of implementation for emerging and future
technologies could be significant, and our ability to fund such implementation
may depend on our ability to obtain additional financing.
WE ARE SUBJECT TO CURRENCY RISK BECAUSE WE OBTAIN A SUBSTANTIAL AMOUNT OF
FINANCING IN US DOLLARS BUT GENERALLY GENERATE REVENUES AND INCUR EXPENSES IN
OTHER CURRENCIES
We will encounter currency exchange rate risks because we generate revenues
and incur construction and operating expenses primarily in British pounds
sterling while we pay interest and principal obligations with respect to most of
our existing indebtedness in United States dollars. We cannot assure you that
any hedging transaction we might enter into will be successful and that shifts
in the currency exchange rates will not have a material adverse effect on us.
WE DO NOT INSURE THE UNDERGROUND PORTION OF OUR CABLE NETWORK
We obtain insurance of the type and in the amounts that we believe are
customary in the UK for similar companies. Consistent with this practice, we do
not insure the underground portion of our cable network. Substantially all of
our cable network is constructed underground. Any catastrophe that affects a
significant portion of one of our system's underground cable network would
result in substantial uninsured losses.
SOME PROVISIONS OF NTL COMMUNICATIONS CORP.'S INDENTURES MAY DELAY OR PREVENT
TRANSACTIONS INVOLVING A CHANGE OF CONTROL
Some provisions of the indenture and the indentures governing NTL
Communications Corp.'s senior notes may have the effect of delaying or
preventing transactions involving a change of control of NTL, including
transactions in which stockholders might otherwise receive a possible
substantial premium for their shares over then current market prices, and may
limit the ability of stockholders to approve transactions that they may deem to
be in their best interest.
NTL Incorporated's restated certificate of incorporation contains various
provisions which may have the effect, alone or in combination with each other or
with the existence of authorized but unissued common stock and any series of
preferred stock, of precluding or rendering more difficult a hostile takeover,
making it more difficult to remove or change the composition of our incumbent
board of directors and our officers, being adverse to stockholders who desire to
participate in a tender offer and depriving stockholders of possible
opportunities to sell their shares at temporarily higher prices. As a result of
the provisions of NTL Incorporated's restated certificate of incorporation and
the ownership of NTL, no change of control requiring stockholder approval is
possible without the consent of the owners of its rights preferred stock.
9
<PAGE> 13
THE INSTRUMENTS GOVERNING SOME OF OUR INDEBTEDNESS MAY INDIRECTLY LIMIT NTL
INCORPORATED'S ABILITY TO PAY DIVIDENDS
The indentures governing NTL Communications Corp.'s senior notes impose
limitations on the payment of dividends to NTL Incorporated and consequently
restrict NTL Incorporated's ability to pay dividends on its common stock.
Further, the terms of the new credit facility restrict, and the terms of other
future indebtedness of our subsidiaries may, subject to the terms of the
indentures governing the senior notes, restrict, the ability of some of our
subsidiaries to distribute earnings to NTL Communications Corp. or make other
payments to NTL Communications Corp.
Before our recent corporate restructurings, NTL Communications Corp. never
paid cash dividends on its common stock and NTL Incorporated has never paid cash
dividends on its common stock. In addition, the payment of any dividends by NTL
Incorporated in the future will be at the discretion of its board of directors
and will depend upon, among other things, future earnings, operations, capital
requirements, its general financial condition and the general financial
condition of our subsidiaries and general business conditions.
THE MARKET PRICE OF THE COMMON STOCK AND THE CONVERTIBLE NOTES IS SUBJECT TO
VOLATILITY
The market price of the common stock has been subject to volatility and, in
the future, the market price of the common stock and the convertible notes could
be subject to wide fluctuations in response to numerous factors, many of which
are beyond our control. These factors include, among other things, actual or
anticipated variations in our operating results, our earnings releases and our
competitors' earnings releases, announcements of technological innovations,
changes in financial estimates by securities analysts, market conditions in the
industry and the general state of the securities markets, governmental
legislation or regulation, currency and exchange rate fluctuations, as well as
general economic and market conditions, such as recessions.
LACK OF PUBLIC MARKET FOR THE CONVERTIBLE NOTES
There has been no public market for the convertible notes prior to the
offering of the convertible notes in December 1998. The registration rights
agreement does not obligate us to keep the registration statement of which this
prospectus forms a part effective beyond the second anniversary of the date of
issuance of the convertible notes. Although the initial purchasers have advised
us that they currently intend to make a market in the convertible notes, they
are not obligated to do so and any such market making may be discontinued at any
time without notice. Accordingly, there can be no assurance as to the ongoing
development or liquidity of any market that may develop for the convertible
notes.
10
<PAGE> 14
YOU SHOULD BE AWARE THAT ACTUAL RESULTS OR OUTCOMES MAY TURN OUT TO BE
MATERIALLY DIFFERENT FROM THOSE CONTAINED IN ANY FORWARD-LOOKING STATEMENTS
INCLUDED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS
This prospectus includes or incorporates by reference projections of
broadcast transmission revenues, build-out results and other forward-looking
statements, including those using words such as "believe," "anticipate,"
"should," "intend," "plan," "will," "expects," "estimates," "projects,"
"positioned," "strategy," and similar expressions. In reviewing that
forward-looking information you should keep in mind that actual results may
differ materially from those expressed or implied in those forward-looking
statements. Important assumptions and factors that could cause actual results to
differ materially from those contemplated or projected, forecast, estimated or
budgeted in or expressed or implied by such projections and forward-looking
statements include those specified in this risk factors section, as well as
- industry trends,
- our ability to
-- continue to design network routes and install facilities,
-- obtain and maintain any required government licenses or approvals,
-- finance construction and development,
all in a timely manner, at reasonable costs and on satisfactory terms and
conditions,
- assumptions about
-- customer acceptance,
-- churn rates,
-- overall market penetration and competition from providers of
alternative services, and
-- availability, terms and deployment of capital.
We assume no obligation to update projections or other forward-looking
statements to reflect actual funding requirements, capital expenditures and
results, changes in assumptions or in the factors affecting such projections or
other forward-looking statements. We cannot assure you that:
- any financings will be obtained when required, on acceptable terms or at
all;
- actual amounts required to complete our planned build out will not exceed
the amount we estimate or that additional financing substantially in
excess of that amount will not be required; (see -- "The anticipated
construction costs of our network will increase as a result of our recent
acquisitions and will require substantial amounts of additional
funding");
- we will not acquire franchises, licenses or other new businesses that
would require additional capital;
11
<PAGE> 15
- operating cash flow will meet expectations or that we will be able to
access such cash from our subsidiaries' operations to meet any unfunded
portion of our capital requirements when required or to satisfy the terms
of the notes, or our other debt instruments and agreements for the
incurrence of additional debt financing (see the risk factor titled,
"-- NTL Incorporated, NTL (Delaware), Inc. and NTL Communications Corp.
are holding companies that are dependent upon cash flow from their
subsidiaries to meet their obligations -- their ability to access that
cash flow may be limited in some circumstances and your right to receive
payments on the notes could be adversely affected in the event of a
bankruptcy of any of their subsidiaries");
- our subsidiaries will not incur losses from their exposure to exchange
rate fluctuations or be adversely affected by interest rate fluctuations
(see the risk factor titled, "-- We are subject to currency risk because
we obtain a substantial amount of financing in US dollars but generally
generate revenues and incur expenses in pounds sterling");
- there will not be adverse changes in applicable United States, United
Kingdom, Australian, Irish, French, Swiss or Bermuda tax laws; or
- the effects of monetary union in Europe will not be materially adverse to
us.
All forward-looking statements included or incorporated by reference in this
prospectus are expressly qualified by the foregoing.
12
<PAGE> 16
USE OF PROCEEDS
The selling securityholders will receive all of the proceeds from the sale
of the securities sold pursuant to this prospectus. We will not receive any of
the proceeds from sales by the selling securityholders of the offered
securities.
13
<PAGE> 17
DESCRIPTION OF THE CONVERTIBLE NOTES
GENERAL
The convertible notes were issued under an indenture dated as of December
16, 1998, by and between NTL Communications Corp. and The Chase Manhattan Bank,
as trustee, as supplemented by a first supplemental indenture, dated March 31,
1999, between NTL Incorporated, NTL Communications Corp. and the trustee, as
further supplemented by a second supplemental indenture, dated March 16, 2000,
between NTL Incorporated, NTL Communications Corp. and the trustee, and as
further amended by a third supplemental indenture, dated May 17, 2000 between
NTL Incorporated, NTL Communications Corp. and NTL Holdings Inc. The original
and the first supplemental indenture and the registration rights agreement are
filed as exhibits to the prior registration statement which is incorporated by
reference into this combined prospectus, and the second and third supplemental
indenture are filed as exhibits to the registration statement of which this
prospectus forms a part. The following summary of selected provisions of the
convertible notes, the indenture and the registration rights agreement is not
complete and is qualified in its entirety by reference to the provisions of the
convertible notes, the indenture and the registration rights agreement,
including the definitions in the indenture of some of the terms used below. The
definitions of some terms used in the following summary are set forth below
under "-- Selected definitions."
The convertible notes are general unsecured obligations of NTL
Incorporated, NTL (Delaware), Inc. and NTL Communications Corp., subordinated in
right of payment to all existing and future senior debt of NTL Communications
Corp., NTL Incorporated, NTL (Delaware), Inc. and as described under
"-- Subordination of convertible notes" and convertible into common stock of NTL
Incorporated as described under "-- Conversion." The indenture does not contain
any financial covenants or restrictions on the payment of dividends, the
incurrence of senior debt or issuance or repurchase of securities of NTL
Incorporated, NTL (Delaware), Inc. or NTL Communications Corp.
The indenture contains no covenants or other provisions to afford
protection to holders of the convertible notes in the event of a highly
leveraged transaction or a change in control of NTL Communications Corp. except
to the extent described under "-- Repurchase at the option of holders."
The operations of NTL Incorporated, NTL (Delaware), Inc. and NTL
Communications Corp. are conducted through their respective subsidiaries,
partnerships and joint ventures. As a result, NTL Incorporated, NTL (Delaware),
Inc. and NTL Communications Corp. each is dependent upon the cash flow of its
subsidiaries, partnerships and affiliated joint ventures to meet its
obligations, including its obligations under the convertible notes. As a result,
the convertible notes are effectively subordinated to all existing and future
liabilities of NTL Incorporated's, NTL (Delaware), Inc.'s and NTL Communications
Corp.'s subsidiaries, partnerships and affiliated joint ventures, including
trade payables.
In this section of the prospectus "Description of the Convertible Notes,"
references to NTL are to NTL Communications Corp. only and not to any of its
subsidiaries.
14
<PAGE> 18
PRINCIPAL, MATURITY AND INTEREST
The convertible notes are limited to $600,000,000 aggregate principal
amount. The convertible notes bear interest from December 16, 1998, at the rate
of 7% per annum and mature on December 15, 2008.
Interest on the convertible notes is payable semiannually on June 15 and
December 15 of each year (each an "Interest Payment Date"), commencing on June
15, 1999, to holders of record at the close of business on June 1 or December 1
(each a "Regular Record Date") immediately preceding such Interest Payment Date.
Interest is computed on the basis of a 360-day year comprised of twelve 30-day
months.
Interest on the convertible notes accrues from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
original issuance.
The convertible notes are payable both as to principal interest and
Liquidated Damages, if any, at the office or agency of NTL maintained for such
purpose within the City and State of New York or, at the option of NTL, payment
of interest may be made by check mailed to the holders of the convertible notes
at their respective addresses set forth in the register of holders of
convertible notes. However, a holder of convertible notes with an aggregate
principal amount in excess of $5,000,000 will be paid by wire transfer in
immediately available funds at the election of such holder if such holder
previously specified in writing to NTL and the paying agent wire transfer
instructions. Until otherwise designated by NTL, NTL's office or agency in New
York will be the office of the Trustee maintained for such purpose. The
convertible notes were issued in registered form, without coupons, and in
denominations of $1,000 and integral multiples thereof.
OPTIONAL REDEMPTION
Except as referred to in this prospectus under "-- Optional tax
redemption," the convertible notes are redeemable, in whole or from time to time
in part, in any integral multiple of $1,000, at the option of NTL at any time on
or after December 15, 2001, at the following redemption prices, expressed as
percentages of the principal amount set forth below, upon not less than 30 nor
more than 60 days' prior notice, if redeemed during the 12-month period
beginning December 15 of the years indicated:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2001...................................................... 104.375%
2002...................................................... 103.500
2003...................................................... 102.625
2004...................................................... 101.750
2005...................................................... 100.875
2006 and thereafter....................................... 100.000
</TABLE>
In the case of a redemption of any convertible notes referred to under
"-- Optional tax redemption," redemption of such convertible notes shall be made
at the principal amount thereof together with accrued and unpaid interest and
Liquidated Damages, if any, to the applicable redemption date.
15
<PAGE> 19
OPTIONAL TAX REDEMPTION
The convertible notes may be redeemed at the option of NTL, in whole but
not in part, upon not less than 30 nor more than 60 days' prior notice, at any
time at a redemption price equal to the principal amount of those notes together
with accrued and unpaid interest to the date fixed for redemption if after the
date on which the provisions described under "-- Additional amounts" become
applicable (the "Relevant Date") there has occurred any change in or amendment
to the laws (or any regulations or official rulings promulgated thereunder) of
the United Kingdom, the Netherlands, Netherlands Antilles, Bermuda or the Cayman
Islands, (or any political subdivision or taxing authority thereof or therein),
or any change in or amendment to the official application or interpretation of
such laws, regulations or rulings (a "Change in Tax Law") which becomes
effective after the Relevant Date, as a result of which NTL is or would be so
required on the next succeeding Interest Payment Date to pay Additional Amounts
with respect to the convertible notes with respect to withholding taxes imposed
by the United Kingdom, the Netherlands, Netherlands Antilles, Bermuda or the
Cayman Islands, (or any political subdivision or taxing authority thereof or
therein)(a "Withholding Tax") and such Withholding Tax is imposed at a rate that
exceeds the rate (if any) at which Withholding Tax was imposed on the Relevant
Date; provided, however, that
(1) this paragraph shall not apply to the extent that, at the Relevant
Date it was known or would have been known had professional advice of a
nationally recognized accounting firm in the United Kingdom, the
Netherlands, Netherlands Antilles, Bermuda or the Cayman Islands, as the
case may be, been sought, that a Change in Tax Law in the United Kingdom,
the Netherlands, Netherlands Antilles, Bermuda or the Cayman Islands, was
to occur after the Relevant Date,
(2) no such notice of redemption may be given earlier than 90 days
prior to the earliest date on which NTL would be obliged to pay such
Additional Amounts were a payment in respect of the Convertible Notes then
due,
(3) at the time such notice of redemption is given, such obligation to
pay such Additional Amounts remains in effect and
(4) the payment of such Additional Amounts cannot be avoided by the use
of any reasonable measures available to NTL.
The convertible notes may also be redeemed, in whole but not in part, at
any time at a redemption price equal to the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages, if any, to the date fixed
for redemption if the person formed after the Relevant Date by a consolidation,
amalgamation, reorganization or reconstruction (or other similar arrangement) of
NTL or the person into which NTL is merged after the Relevant Date or to which
NTL conveys, transfers or leases its properties and assets after the Relevant
Date substantially as an entirety (collectively, a "Subsequent Consolidation")
is required, as a consequence of such Subsequent Consolidation and as a
consequence of a Change in Tax Law in the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands occurring after the date of
such Subsequent Consolidation to pay Additional Amounts with respect
16
<PAGE> 20
to Withholding Tax on the Convertible Notes and such Withholding Tax is imposed
at a rate that exceeds the rate (if any) at which Withholding Tax was or would
have been imposed on the date of such Subsequent Consolidation; provided,
however, that this paragraph shall not apply to the extent that, at the date of
such Subsequent Consolidation it was known or would have been known had
professional advice of a nationally recognized accounting firm in the United
Kingdom been sought, that a Change in Tax Law in the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands was to
occur after such date. NTL will also pay, or make available for payment, to
holders on the redemption date any Additional Amounts (as described, but subject
to the exceptions referred to, under "Additional Amounts") resulting from the
payment of such redemption price.
MANDATORY REDEMPTION
Except as set forth below under "Repurchase at the option of holders," NTL
is not required to make mandatory redemption or sinking fund payments with
respect to the convertible notes.
REPURCHASE AT THE OPTION OF HOLDERS
Upon the occurrence of a Change of Control, each holder of convertible
notes shall have the right to require NTL to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such holder's Convertible Notes
pursuant to the offer described below (the "Change of Control Offer") at a
purchase price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the Change of Control
Payment Date (the "Change of Control Payment"). Within 40 days following any
Change of Control, NTL shall mail a notice to each holder stating:
(1) that the Change of Control Offer is being made pursuant to the
covenant entitled "Change of Control" and that all Convertible Notes
tendered will be accepted for payment;
(2) the purchase price and the purchase date, which shall be no earlier
than 30 days nor later than 40 days from the date such notice is mailed
(the "Change of Control Payment Date");
(3) that any convertible notes not tendered will continue to accrue
interest;
(4) that, unless NTL defaults in the payment of the Change of Control
Payment, all convertible notes accepted for payment pursuant to the Change
of Control Offer shall cease to accrue interest after the Change of Control
Payment Date;
(5) that holders electing to have any convertible notes purchased
pursuant to a Change of Control Offer will be required to surrender the
convertible notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the convertible notes completed, to the Paying
Agent at the address specified in the
17
<PAGE> 21
notice prior to the close of business on the third Business Day preceding
the Change of Control Payment Date;
(6) that holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
holder, the principal amount of convertible notes delivered for purchase,
and a statement that such holder is withdrawing his election to have such
convertible notes purchased; and
(7) that holders whose convertible notes are being purchased only in
part will be issued new convertible notes equal in principal amount to the
unpurchased portion of the convertible notes surrendered, which unpurchased
portion must be equal to $1,000 in principal amount or an integral multiple
thereof.
NTL will comply with the requirements of Rules 13e-4 and 14e-1 under the
Securities Exchange Act of 1934, as amended, and any other securities laws and
regulations thereunder to the extent such laws and regulations are applicable in
connection with the repurchase of the convertible notes in connection with a
Change of Control.
On the Change of Control Payment Date, NTL will, to the extent lawful,
(1) accept for payment convertible notes or portions thereof tendered
pursuant to the Change of Control Offer,
(2) deposit with the paying agent an amount equal to the Change of
Control Payment in respect of all convertible notes or portions thereof so
tendered and
(3) deliver or cause to be delivered to the Trustee the convertible
notes so accepted together with an officers' certificate stating the
convertible notes or portions thereof tendered to NTL. The paying agent
shall promptly mail to each holder of convertible notes so accepted for
payment (or, if such holder of convertible notes holds an aggregate
principal amount in excess of $5,000,000 will be paid by wire transfer in
immediately available funds at the election of such holder if such holder
previously specified in writing to NTL and the paying agent) an amount
equal to the purchase price for such convertible notes, and the trustee
shall promptly authenticate and mail to each holder a new convertible note
equal in principal amount to any unpurchased portion of the convertible
notes surrendered, if any; provided that each such new convertible note
shall be in a principal amount of $1,000 or an integral multiple thereof.
NTL will publicly announce the results of the Change of Control Offer on or
as soon as practicable after the Change of Control Payment Date.
Except as described above with respect to a Change of Control, the
indenture does not contain any other provisions that permit the holders of the
convertible notes to require that NTL repurchase or redeem the convertible notes
in the event of a takeover, recapitalization or similar restructuring. Although
the indenture contains several covenants, including the provision described
under "-- Merger, Consolidation or Sale of
18
<PAGE> 22
Assets" below, the provisions of the indenture may not necessarily afford
holders of the convertible notes protection in the event of a highly leveraged
transaction, reorganization, restructuring, merger or similar transaction
involving NTL that may adversely affect the holders of the convertible notes.
The Change of Control Offer requirement of the convertible notes may in
certain circumstances make more difficult or discourage a takeover of NTL, and,
thus, the removal of incumbent management. The Change of Control Offer
requirement, however, is not the result of management's knowledge of any
specific effort to accumulate NTL's stock or to obtain control of NTL by means
of a merger, tender offer, solicitation or otherwise, or part of a plan by
management to adopt a series of antitakeover provisions. Instead, the Change of
Control Offer requirement is a result of negotiations between NTL and the
initial purchasers. Management has no present intention to engage in a
transaction involving a Change of Control, although it is possible that NTL
would decide to do so in the future. Subject to the limitations discussed below,
NTL could, in the future, enter into certain transactions, including
acquisitions, refinancings or other recapitalizations, that would not constitute
a Change of Control under the indenture, but that could increase the amount of
indebtedness outstanding at such time or otherwise affect NTL's capital
structure or credit ratings.
Change of control provisions are contained in each of the indentures for
NTL's outstanding senior notes and NTL Incorporated's and NTL (Delaware), Inc.'s
outstanding convertible notes. The indentures for the Existing Convertible
Notes, NTL Incorporated's and NTL (Delaware), Inc's 5 3/4% convertible
subordinated notes due 2009 for the outstanding indebtedness of Diamond and for
the Partners 11.20% Debentures also contain change of control provisions.
NTL's ability to pay cash to the holders of Convertible Notes pursuant to a
Change of Control Offer may be limited by NTL's then existing financial
resources. See "Risk Factors -- Our substantial leverage could adversely affect
our financial health and prevent us from fulfilling our obligation under the
notes" and "-- NTL Incorporated and NTL Communications Corp. are holding
companies that are dependent upon cash flow from their subsidiaries to meet
their obligations -- their ability to access that cash flow may be limited in
some circumstances." NTL's credit facility does, and any future credit
agreements or other agreements relating to indebtedness of NTL may, contain
prohibitions or restrictions on NTL's ability to effect a Change of Control
Payment. In the event a Change of Control occurs at a time when such
prohibitions or restrictions are in effect, NTL could seek the consent of its
lenders to the purchase of the convertible notes and other indebtedness
containing change of control provisions or could attempt to refinance the
borrowings that contain such prohibition. If NTL does not obtain such a consent
or repay such borrowings, NTL will be effectively prohibited from purchasing the
convertible notes. In such case, NTL's failure to purchase tendered convertible
notes would constitute an Event of Default under the indenture. Moreover, the
events that constitute a Change of Control under the indenture constitute events
of default under NTL's credit facility and may also constitute events of default
under future debt instruments or credit agreements of NTL or NTL's subsidiaries.
Such events of default
19
<PAGE> 23
may permit the lenders under such debt instruments or credit agreements to
accelerate the debt and, if such debt is not paid or repurchased, to enforce
their security interests in what may be all or substantially all of the assets
of NTL's subsidiaries. Any such enforcement may limit NTL's ability to raise
cash to repay or repurchase the convertible notes.
For the reasons described in the three immediately preceding paragraphs,
there can be no assurance that NTL will be able to repurchase the convertible
notes upon a Change of Control.
The Board of Directors of NTL may not, by itself, waive or modify the
Change of Control provisions of the indenture. All the provisions of the
indenture, including the Change of Control provision, may only be waived or
modified pursuant to the provisions described under "-- Amendment, supplement
and waiver" below.
SELECTION AND NOTICE
If less than all of the convertible notes are to be redeemed at any time,
selection of convertible notes for redemption will be made by the trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the convertible notes are listed, or, if the convertible notes
are not so listed, on a pro rata basis, by lot or by such method as the trustee
shall deem fair and appropriate, provided that no convertible notes of $1,000 or
less shall be redeemed in part. Notice of redemption shall be mailed by first
class mail at least 30 but not more than 60 days, prior to the redemption date
to each holder of convertible notes to be redeemed at its registered address. If
any convertible note is to be redeemed in part only, the notice of redemption
that relates to such convertible note shall state the portion of the principal
amount thereof to be redeemed. A new convertible note in principal amount equal
to the unredeemed portion thereof will be issued in the name of the holder
thereof upon cancellation of the original convertible note. On and after the
redemption date, interest ceases to accrue on convertible notes or portions of
them called for redemption.
CONVERSION
The holder of any convertible note has the right, exercisable at any time
prior to maturity, to convert the principal amount thereof (or any portion
thereof that is an integral multiple of $1,000) into shares of common stock of
NTL Incorporated at the conversion price of $39.20, subject to adjustment as
described below (the "Conversion Price"), except that if a convertible note is
called for redemption, the conversion right will terminate at the close of
business on the business day immediately preceding the date fixed for
redemption. As a result of the adjustments described above, after the recent
corporate restructurings, the convertible notes became convertible into shares
of NTL Incorporated common stock instead of shares of NTL Communications Corp.
common stock and, as a consequence, the adjustments described below relate to
NTL Incorporated instead of NTL Communications Corp. Upon conversion, no
adjustment or payment will be made for interest, but if any holder surrenders a
convertible note for conversion after the close of business on the record date
for the payment of an
20
<PAGE> 24
installment of interest and prior to the opening of business on the next
interest payment date, then, notwithstanding such conversion, the interest
payable on such interest payment date will be paid to the registered holder of
such convertible note on such record date. In such event, such convertible note,
when surrendered for conversion, need not be accompanied by payment of an amount
equal to the interest payable on such interest payment date on the portion so
converted. No fractional shares will be issued upon conversion but a cash
adjustment will be made for any fractional interest.
The indenture provides that the Conversion Price is subject to adjustment
upon the occurrence of certain events, including:
(1) the issuance of shares of common stock as a dividend or
distribution on the common stock;
(2) the subdivision or combination of the outstanding common stock;
(3) the issuance to substantially all holders of common stock of rights
or warrants to subscribe for or purchase common stock (or securities
convertible into common stock) at a price per share less than the then
current market price per share, as defined;
(4) the distribution of shares of capital stock of NTL Incorporated
(other than common stock), evidences of indebtedness or other assets
(excluding dividends in cash, except as described in clause (5) below) to
all holders of common stock;
(5) the distribution, by dividend or otherwise, of cash to all holders
of common stock in an aggregate amount that, together with the aggregate of
any other distributions of cash that did not trigger a Conversion Price
adjustment to all holders of its common stock within the 12 months
preceding the date fixed for determining the stockholders entitled to such
distribution and all Excess Payments in respect of each tender offer or
other negotiated transaction by NTL Incorporated or any of its Subsidiaries
for common stock concluded within the preceding 12 months not triggering a
conversion price adjustment, exceeds 10% of the product of the current
market price per share (determined as set forth below) on the date fixed
for the determination of stockholders entitled to receive such distribution
times the number of shares of common stock outstanding on such date;
(6) payment of an Excess Payment in respect of a tender offer or other
negotiated transaction by NTL Incorporated or any of its subsidiaries for
common stock, if the aggregate amount of such Excess Payment, together with
the aggregate amount of cash distributions made within the preceding 12
months not triggering a conversion price adjustment and all Excess Payments
in respect of each tender offer or other negotiated transaction by NTL
Incorporated or any of its subsidiaries for common stock concluded within
the preceding 12 months not triggering a conversion price adjustment,
exceeds 10% of the product of the current market price per share on the
expiration of such tender offer times the number of shares of common stock
outstanding on such date; and
21
<PAGE> 25
(7) the distribution to substantially all holders of common stock of
rights or warrants to subscribe for securities (other than those referred
to in clause (3) above). In the event of a distribution to substantially
all holders of common stock of rights to subscribe for additional shares of
Incorporated's capital stock (other than those referred to in clause (3)
above), NTL may, instead of making any adjustment in the Conversion Price,
make proper provision so that each holder of a convertible note who
converts such convertible note after the record date for such distribution
and prior to the expiration or redemption of such rights shall be entitled
to receive upon such conversion, in addition to shares of common stock, an
appropriate number of such rights. No adjustment of the Conversion Price
will be made until cumulative adjustments amount to one percent or more of
the Conversion Price as last adjusted.
If NTL Incorporated reclassifies or changes its outstanding common stock,
or consolidates with or merges into or transfers or leases all or substantially
all of its assets to any person, or is a party to a merger that reclassifies or
changes its outstanding common stock, the convertible notes will become
convertible into the kind and amount of securities, cash or other assets which
the holders of the convertible notes would have owned immediately after the
transaction if the holders had converted the convertible notes immediately
before the effective date of the transaction.
The indenture also provides that if rights, warrants or options expire
unexercised the Conversion Price shall be readjusted to take into account the
actual number of such warrants, rights or options which were exercised.
In the indenture, the "current market price" per share of common stock on
any date shall be deemed to be the average of the Daily Market Prices for the
shorter of
(1) 30 consecutive business days ending on the last full trading day on
the exchange or market referred to in determining such Daily Market Prices
prior to the time of determination (as defined in the indenture) or
(2) the period commencing on the date next succeeding the first public
announcement of the issuance of such rights or warrants or such
distribution through such last full trading day prior to the time of
determination.
NTL is permitted to make such reductions in the Conversion Price as it, in
its discretion, determines to be advisable in order that any stock dividend,
subdivision of shares, distribution or rights to purchase stock or securities or
distribution of securities convertible into or exchangeable for stock made by
NTL Incorporated to its stockholders will not be taxable to the recipients.
SUBORDINATION OF CONVERTIBLE NOTES
The convertible notes are subordinate in right of payment to all existing
and future Senior Debt. The indenture does not restrict the amount of Senior
Debt or other Indebtedness of NTL or any Subsidiary of NTL.
22
<PAGE> 26
The payment of the principal of, interest on or any other amounts due on
the convertible notes is subordinated in right of payment to the prior payment
in full of all Senior Debt of NTL. No payment on account of principal of,
redemption of, interest on or any other amounts due on the convertible notes,
including, without limitation, any payments on the Change of Control Offer, and
no redemption, purchase or other acquisition of the convertible notes may be
made unless
(1) full payment of amounts then due on all Senior Debt have been made or
duly provided for pursuant to the terms of the instrument governing such Senior
Debt, and
(2) at the time for, or immediately after giving effect to, any such
payment, redemption, purchase or other acquisition, there shall not exist under
any Senior Debt or any agreement pursuant to which any Senior Debt has been
issued, any default which shall not have been cured or waived and which shall
have resulted in the full amount of such Senior Debt being declared due and
payable.
In addition, the indenture provides that if any of the holders of any issue
of Senior Debt notify (the "Payment Blockage Notice") NTL and the trustee that a
default has occurred giving the holders of such Senior Debt the right to
accelerate the maturity thereof, no payment on account of principal, redemption,
interest, Liquidated Damages, if any, or any other amounts due on the
convertible notes and no purchase, redemption or other acquisition of the
convertible notes will be made for the period (the "Payment Blockage Period")
commencing on the date notice is received and ending on the earlier of
(A) the date on which such event of default shall have been cured or waived
or
(B) 180 days from the date notice is received.
Notwithstanding the foregoing, only one Payment Blockage Notice with
respect to the same event of default or any other events of default existing and
known to the person giving such notice at the time of such notice on the same
issue of Senior Debt may be given during any period of 360 consecutive days
unless such event of default or such other events of default have been cured or
waived for a period of not less than 90 consecutive days. No new Payment
Blockage Period may be commenced by the holders of Senior Debt during any period
of 360 consecutive days unless all events of default which triggered the
preceding Payment Blockage Period have been cured or waived.
Upon any distribution of its assets in connection with any dissolution,
winding-up, liquidation or reorganization of NTL or acceleration of the
principal amount due on the convertible notes because of an Event of Default,
all Senior Debt must be paid in full before the holders of the convertible notes
are entitled to any payments whatsoever.
As a result of these subordination provisions, in the event of NTL's
insolvency, holders of the convertible notes may recover ratably less than
general creditors of NTL.
If payment of the convertible notes is accelerated because of an Event of
Default, NTL or the Trustee shall promptly notify the holders of Senior Debt or
the trustee(s) for such Senior Debt of the acceleration. NTL may not pay the
convertible notes until
23
<PAGE> 27
five days after such holders or trustee(s) of Senior Debt receive notice of such
acceleration and, thereafter, may pay the convertible notes only if the
subordination provisions of the Indenture otherwise permit payment at that time.
The convertible notes are obligations exclusively of NTL. Since the
operations of NTL are conducted through its Subsidiaries, the cash flow and the
consequent ability to service debt, including the convertible notes, of NTL, are
dependent upon the earnings of its Subsidiaries and the distribution of those
earnings to, or upon loans or other payments of funds by those Subsidiaries to,
NTL. The payment of dividends and the making of loans and advances to NTL by its
Subsidiaries may be subject to statutory or contractual restrictions, are
dependent upon the earnings of those Subsidiaries and are subject to various
business considerations.
Any right of NTL to receive assets of any of its Subsidiaries upon their
liquidation or reorganization (and the consequent right of the holders of the
convertible notes to participate in those assets) will be effectively
subordinated to the claims of that Subsidiary's creditors (including trade
creditors), except to the extent that NTL is itself recognized as a creditor of
such Subsidiary, in which case the claims of NTL would still be subordinate to
any security interests in the assets of such Subsidiary and any indebtedness of
such Subsidiary senior to that held by NTL.
The indenture does not limit the amount of additional indebtedness,
including Senior Debt, which NTL can create, incur, assume or guarantee, nor
will the indenture limit the amount of indebtedness and other liabilities which
any Subsidiary can create, incur, assume or guarantee.
In the event that, notwithstanding the foregoing, the trustee or any holder
of convertible notes receives any payment or distribution of assets of NTL of
any kind in contravention of any of the terms of the indenture, whether in cash,
property or securities, including, without limitation by way of set-off or
otherwise, in respect of the convertible notes before all Senior Debt is paid in
full, then such payment or distribution will be held by the recipient in trust
for the benefit of holders of Senior Debt, and will be immediately paid over or
delivered to the holders of Senior Debt or their representative or
representatives to the extent necessary to make payment in full of all Senior
Debt remaining unpaid, after giving effect to any concurrent payment or
distribution, or provision therefor, to or for the holders of Senior Debt.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The indenture provides that NTL may not consolidate or merge with or into
(whether or not NTL is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its properties
or assets in one or more related transactions to another corporation, person or
entity unless
(1) NTL is the surviving corporation or the entity or the person formed
by or surviving any such consolidation or merger (if other than NTL) or to
which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is a corporation organized or existing
under the laws of the United Kingdom,
24
<PAGE> 28
the Netherlands, the Netherlands Antilles, Bermuda, the Cayman Islands or
of the United States, any state thereof or the District of Columbia;
(2) the entity or person formed by or surviving any such consolidation
or merger (if other than NTL) or the entity or person to which such sale,
assignment, transfer, lease, conveyance or other disposition will have been
made assumes all the Obligations (including the due and punctual payment of
Additional Amounts if the surviving corporation is a corporation organized
or existing under the laws of the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands) of NTL under the
convertible notes and the indenture, pursuant to a supplemental indenture
in a form reasonably satisfactory to the Trustee;
(3) immediately after such transaction no Default or Event of Default
exists;
(4) NTL or any entity or person formed by or surviving any such
consolidation or merger or to which such sale, assignment, transfer, lease,
conveyance or other disposition will have been made will have a ratio of
Indebtedness to Annualized Pro Forma EBITDA equal to or less than the ratio
of Indebtedness to Annualized Pro Forma EBITDA of NTL immediately preceding
the transaction; provided, however, that, if the ratio of Indebtedness to
Annualized Pro Forma EBITDA of NTL immediately preceding such transaction
is 6:1 or less, then the ratio of Indebtedness to Annualized Pro Forma
EBITDA of NTL may be 0.5 greater than such ratio immediately preceding such
transaction; and
(5) such transaction would not result in the loss of any material
authorization or Material License of NTL or its Subsidiaries.
ADDITIONAL AMOUNTS
The following provisions of this paragraph will apply only in the event
that NTL becomes, or a successor to NTL is, a corporation organized or existing
under the laws of the United Kingdom, the Netherlands, the Netherlands Antilles,
Bermuda or the Cayman Islands. All payments made by NTL on the convertible notes
will be made without deduction or withholding, for or on account of, any and all
present or future taxes, duties, assessments, or governmental charges of
whatever nature unless the deduction or withholding of such taxes, duties,
assessments or governmental charges is then required by law. If any deduction or
withholding for or on account of any present or future taxes, assessments or
other governmental charges of the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands (or any political
subdivision or taxing authority thereof or therein) shall at any time be
required in respect of any amounts to be paid by NTL under the convertible
notes, NTL will pay or cause to be paid such additional amounts ("Additional
Amounts") as may be necessary in order that the net amounts received by a holder
of a convertible note after such deduction or withholding shall be not less than
the amounts specified in such convertible
25
<PAGE> 29
note to which such holder is entitled; provided, however, that NTL shall not be
required to make any payment of Additional Amounts for or on account of:
(1) any tax, assessment or other governmental charge to the extent such
tax, assessment or other governmental charge would not have been imposed
but for
(a) the existence of any present or former connection between
such holder (or between a fiduciary, settlor, beneficiary, member or
shareholder of, or possessor of a power over, such holder, if such
holder is an estate, nominee, trust, partnership or corporation), other
than the holding of a convertible note or the receipt of amounts
payable in respect of a convertible note and the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands or
any political subdivision or taxing authority thereof or therein,
including, without limitation, such holder (or such fiduciary, settlor,
beneficiary, member, shareholder or possessor) being or having been a
citizen or resident thereof or being or having been present or engaged
in trade or business therein or having or having had a permanent
establishment therein or
(b) the presentation of a convertible note (where presentation is
required) for payment on a date more than 30 days after the date on
which such payment became due and payable or the date on which payment
thereof is duly provided for, whichever occurs later, except to the
extent that the holder would have been entitled to Additional Amounts
had the convertible note been presented on the last day of such period
of 30 days;
(2) any tax, assessment or other governmental charge that is imposed or
withheld by reason of the failure to comply by the holder of a convertible
note, or, if different, the beneficial owner of the interest payable on a
convertible note, with a timely request of NTL addressed to such holder or
beneficial owner to provide information, documents or other evidence
concerning the nationality, residence, identity or connection with the
taxing jurisdiction of such holder or beneficial owner which is required or
imposed by a statute, regulation or administrative practice of the taxing
jurisdiction a precondition to exemption from all or part of such tax,
assessment or governmental charge;
(3) any estate, inheritance, gift, sales, transfer, personal property
or similar tax, assessment or other governmental charge;
(4) any tax, assessment or other governmental charge which is
collectible otherwise than by withholding from payments of principal amount
at maturity, redemption amount, Change of Control Payment, interest with
respect to a convertible note or withholding from the proceeds of a sale or
exchange of a convertible note;
(5) any tax, assessment or other governmental charge required to be
withheld by any Paying Agent from any payment of principal amount at
maturity, redemption amount, Change of Control Payment or interest with
respect to a convertible note, if such payment can be made, and is in fact
made, without such withholding by any other Paying Agent located inside the
United States;
26
<PAGE> 30
(6) any tax, assessment or other governmental charge imposed on a
holder that is not the beneficial owner of a convertible note to the extent
that the beneficial owner would not have been entitled to the payment of
any such Additional Amounts had the beneficial owner directly held such
convertible note;
(7) any combination of items (1), (2), (3), (4), (5) and (6) above;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any interest on, any convertible note to any holder who is a
fiduciary or partnership or other than the sole beneficial owner of such payment
to the extent that a beneficiary or settlor would not have been entitled to any
Additional Amounts had such beneficiary or settlor been the holder of such
convertible note. All references to interest on the convertible notes in the
indenture or the convertible notes shall include any Additional Amounts payable
to NTL pursuant to this paragraph.
REPORTS
Whether or not required by the rules and regulations of the Commission, so
long as any convertible notes are outstanding, NTL will file with the Commission
and furnish to the holders of the convertible notes all quarterly and annual
financial information required to be contained in a filing with the Commission
on Forms 10-Q and 10-K (or the equivalent thereof under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") for foreign private issuers in the
event NTL becomes a corporation organized under the laws of the United Kingdom,
the Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands),
including a "Management's Discussion and Analysis of Results of Operations and
Financial Condition" and with respect to the annual information only, a report
thereon by NTL's certified independent accountants, in each case, as required by
the rules and regulations of the Commission as in effect on the Issuance Date.
EVENTS OF DEFAULTS AND REMEDIES
The indenture provides that each of the following constitutes an Event of
Default:
(1) default for 30 days in the payment when due of interest (and
Additional Amounts, if applicable) on the convertible notes;
(2) default in payment when due of principal on the convertible notes;
(3) failure by NTL, NTL Incorporated or NTL (Delaware), Inc. to comply
with the provisions described under "-- Repurchase at the option of the
holders";
(4) failure by NTL for 60 days after notice to comply with certain
other covenants and agreements contained in the indenture or the
convertible notes;
(5) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
indebtedness for money borrowed by NTL or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by NTL or any of its
Restricted Subsidiaries), whether such Indebtedness or guarantee now
exists, or is created after the Issuance Date, which
27
<PAGE> 31
default (a) is caused by a failure to pay when due principal or interest on
such Indebtedness within the grace period provided in such Indebtedness
(which failure continues beyond any applicable grace period) (a "Payment
Default") or (b) results in the acceleration of such Indebtedness prior to
its express maturity and in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $10 million or more;
(6) failure by NTL or any Restricted Subsidiary of NTL to pay final
judgements (other than any judgment as to which a reputable insurance
company has accepted full liability) aggregating in excess of $5 million,
which judgments are not stayed within 60 days after their entry;
(7) certain events of bankruptcy or insolvency with respect to NTL or
any of its Material Subsidiaries; and
(8) the revocation of a Material License.
If any Event of Default occurs and is continuing, the trustee or the
holders of at least 25% in principal amount of the then outstanding convertible
notes may declare all the convertible notes to be due and payable immediately,
subject to the provisions limiting payment described in "-- Subordination of
convertible notes." Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, with respect to
NTL or any Material Subsidiary, all outstanding convertible notes will become
due and payable without further action or notice. Holders of the convertible
notes may not enforce the indenture or the convertible notes except as provided
in the indenture. Subject to certain limitations, holders of a majority in
principal amount of the then outstanding convertible notes may direct the
trustee in its exercise of any trust or power. The trustee may withhold from
holders of the convertible notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest or Liquidated Damages, if any) if it determines that
withholding notice is in their interest.
The holders of a majority in aggregate principal amount of the convertible
notes then outstanding by notice to the trustee may on behalf of the holders of
all of the convertible notes waive any existing Default or Event of Default and
its consequences under the indenture except a continuing Default or Event of
Default in the payment of interest on, or the principal of, the convertible
notes.
NTL is required to deliver to the trustee annually a statement regarding
compliance with the indenture, and NTL is required, upon becoming aware of any
Default or Event of Default, to deliver to the trustee a statement specifying
such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND SHAREHOLDERS
No director, officer, employee, incorporator or shareholder of NTL, as
such, shall have any liability for any Obligations of NTL under the convertible
notes or the
28
<PAGE> 32
indenture or for any claim based on, in respect of, or by reason of, such
Obligations or their creation. Each holder of the convertible notes by accepting
a convertible note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the convertible notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.
BOOK-ENTRY, DELIVERY AND FORM
The convertible notes sold within the United States to qualified
institutional buyers were issued in the form of one or more global notes. The
global notes were deposited with, or on behalf of, DTC and registered in the
name of DTC or its nominee. Except as set forth below, the global notes may be
transferred, in whole and not in part, only to DTC or another nominee of DTC.
Investors may hold their beneficial interests in the global notes directly
through DTC if they are Participants in such system or indirectly through
organizations that are Participants in such system.
DTC is a limited-purpose trust company that was created to hold securities
for its participating organizations (collectively, the "Participants" or "DTC's
Participants") and to facilitate the clearance and settlement of transactions in
such securities between Participants through electronic book-entry changes in
accounts of its Participants. DTC's Participants include securities brokers and
dealers (including the Initial Purchasers), banks and trust companies, clearing
corporations and certain other organizations. Access to the Depositary's system
is also available to other entities such as banks, brokers, dealers and trust
companies (collectively, the "Indirect Participants" or "DTC's Indirect
Participants") that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. Persons who are not Participants may
beneficially own securities held by or on behalf of DTC only through DTC's
Participants or DTC's Indirect Participants.
NTL expects that pursuant to procedures established by DTC ownership of the
convertible notes evidenced by the global notes will be shown on, and the
transfer of ownership thereof will be effected only through, records maintained
by DTC (with respect to the interests of the Depositary's Participants), DTC's
Participants and DTC's Indirect Participants. Prospective purchasers are advised
that the laws of some states require that certain persons take physical delivery
in definitive form of securities that they own. Consequently, the ability to
transfer convertible notes evidenced by the global notes will be limited to such
extent.
So long as the global note holder is the registered owner of any
convertible notes, the global note holder will be considered the sole holder
under the indenture of any convertible notes evidenced by the global notes.
Beneficial owners of convertible notes evidenced by the global notes will not be
considered the owners or holders thereof under the indenture for any purpose,
including with respect to the giving of any directions, instructions or
approvals to the trustee thereunder. Neither NTL nor the trustee will have any
responsibility or liability for any aspect of the records of DTC or for
maintaining, supervising or reviewing any records of DTC relating to the
convertible notes.
29
<PAGE> 33
Payments in respect of the principal of, interest and Liquidated Damages,
if any, on any convertible notes registered in the name of the global note
holder on the applicable record date will be payable by the Trustee to or at the
direction of the global note holder in its capacity as the registered holder
under the Indenture. Under the terms of the indenture, NTL and the trustee may
treat the persons in whose names convertible notes, including the global notes,
are registered as the owners thereof for the purpose of receiving such payments.
Consequently, neither NTL nor the trustee has or will have any responsibility or
liability for the payment of such amounts to beneficial owners of convertible
notes (including principal, interest and Liquidated Damages, if any). NTL
believes, however, that it is currently the policy of DTC to immediately credit
the accounts of the relevant Participants with such payments, in amounts
proportionate to their respective holdings of beneficial interests in the
relevant security as shown on the records of DTC. Payments by DTC's Participants
and DTC's Indirect Participants to the beneficial owners of Convertible Notes
will be governed by standing instructions and customary practice and will be the
responsibility of DTC's Participants or DTC's Indirect Participants.
CERTIFICATED NOTES
The convertible notes sold to a limited number of "accredited investors"
(as defined in Rule 501(a)(1), (2), (3), (4) or (7) under the Securities Act)
were issued in the form of registered definitive certificates. Furthermore,
subject to certain conditions, any person having a beneficial interest in the
global notes may, upon request to the trustee, exchange such beneficial interest
for convertible notes evidenced by certificated securities. Upon any such
issuance, the trustee is required to register such certificated securities in
the name of, and cause the same to be delivered to, such person or persons (or
the nominee of any thereof). In addition, if
(1) NTL notifies the trustee in writing that DTC is no longer willing
or able to act as a depositary and NTL is unable to locate a qualified
successor within 90 days or
(2) NTL, at its option, notifies the trustee in writing that it elects
to cause the issuance of convertible notes in the form of certificated
securities under the Indenture, then, upon surrender by the global note
holder of its global notes, convertible notes in such form will be issued
to each person that the global note holder and DTC identify as being the
beneficial owner of the related convertible notes.
Neither NTL nor the trustee will be liable for any delay by the global note
holder or DTC in identifying the beneficial owners of convertible notes and NTL
and the trustee may conclusively rely on, and will be protected in relying on,
instructions from the Global Note Holder or DTC for all purposes.
TRANSFER AND EXCHANGE
A holder may transfer or exchange convertible notes in accordance with the
indenture. The registrar and the trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and NTL may
require a holder
30
<PAGE> 34
to pay any taxes and fees required by law or permitted by the indenture. NTL is
not required to transfer or exchange any convertible note selected for
redemption. Also, NTL is not required to transfer or exchange any convertible
note for a period of 15 days before a selection of convertible notes to be
redeemed.
The registered holder of a convertible note will be treated as the owner of
it for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the indenture or
the convertible notes may be amended or supplemented with the consent of the
holders of at least a majority in principal amount of the then outstanding
convertible notes (including consents obtained in connection with a tender offer
or exchange offer for convertible notes), and any existing default or compliance
with any provision of the indenture or the convertible notes may be waived with
the consent of the holders of a majority in principal amount of the then
outstanding convertible notes (including consents obtained in connection with a
tender offer or exchange offer for convertible notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any convertible notes held by a nonconsenting holder of
convertible notes)
(1) reduce the principal amount of convertible notes whose holders must
consent to an amendment, supplement or waiver,
(2) reduce the principal of or change the fixed maturity of any
convertible note or alter the provisions with respect to the redemption of
the convertible notes,
(3) reduce the rate of or change the time for payment of interest on
any Convertible Note,
(4) waive a default in the payment of principal of or interest or
Liquidated Damages, if any, on any convertible notes (except a rescission
of acceleration of the convertible notes by the holders of at least a
majority in aggregate principal amount of the convertible notes and a
waiver of the payment default that resulted from such acceleration),
(5) make any convertible note payable in money other than that stated
in the convertible notes,
(6) make any change in the provisions of the indenture relating to
waivers of past Defaults or the rights of holders of convertible notes to
receive payments of principal of or interest or Liquidated Damages, if any,
on the convertible notes,
(7) waive a redemption payment with respect to any convertible note,
(8) impair the right to convert the convertible notes into common
stock,
(9) modify the conversion or subordination provisions of the indenture
in a manner adverse to the holders of the convertible notes or
(10) make any change in the foregoing amendment and waiver provisions.
31
<PAGE> 35
Notwithstanding the foregoing, without the consent of any holder of
convertible notes, NTL and the trustee may amend or supplement the indenture or
the convertible notes to cure any ambiguity, defect or inconsistency, to provide
for uncertificated convertible notes in addition to or in place of certificated
convertible notes, to provide for the assumption of NTL's obligations to holders
of the convertible notes in the case of a merger or consolidation, to make any
change that would provide any additional rights or benefits to the holders of
the convertible notes or that does not adversely affect the legal rights under
the Indenture of any such holder, or to comply with requirements of the
Commission in order to maintain the qualification of the indenture under the
Trust Indenture Act.
CONCERNING THE TRUSTEE
The indenture contains certain limitations on the rights of the trustee,
should it become a creditor of NTL, to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any such claim
as security or otherwise. The trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The holders of a majority in principal amount of the then outstanding
convertible notes will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the trustee,
subject to certain exceptions. The indenture provides that, in case an Event of
Default shall occur (which shall not have been cured), the trustee will be
required, in the exercise of its power, to use the degree of care of a prudent
man in the conduct of his own affairs. Subject to such provisions, the trustee
will be under no obligation to exercise any of its rights or powers under the
indenture at the request of any holder of convertible notes, unless such holder
shall have offered to the trustee security and indemnity satisfactory to it
against any loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the indenture and
the Registration Rights Agreement without charge by writing to NTL, 110 East
59th Street, New York, New York 10022, Attention: Richard J. Lubasch, Esq.,
Executive Vice President, General Counsel and Secretary.
DEFINITIONS
Set forth below are selected defined terms used in the indenture. Reference
is made to the indenture for a full disclosure of all such terms, as well as any
other capitalized terms used in this "Description of the Convertible Notes"
section of the prospectus for which no definition is provided.
"Annualized Pro Forma EBITDA" means, with respect to any person, such
person's Pro Forma EBITDA for the latest fiscal quarter multiplied by four.
32
<PAGE> 36
"Capital Stock" means any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock, including, without
limitation, partnership interests.
"Change of Control" means
(1) the sale, lease or transfer of all or substantially all of the
assets of NTL to any "Person" or "group" (within the meaning of Sections
13(d)(3) and 14(d)(2) of the Exchange Act or any successor provision to
either of the foregoing, including any group acting for the purpose of
acquiring, holding or disposing of securities within the meaning of Rule
13d-5(b)(1) under the Exchange Act) (other than any Permitted Holder),
(2) the approval by the requisite stockholders of NTL of a plan of
liquidation or dissolution of NTL,
(3) any "Person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act or any successor provision to either of the
foregoing, including any group acting for the purpose of acquiring, holding
or disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act), other than any Permitted Holder, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act) of more than 50%
of the total voting power of all classes of the voting stock of NTL and/or
warrants or options to acquire such voting stock, calculated on a fully
diluted basis, unless, as a result of such transaction, the ultimate direct
or indirect ownership of NTL is substantially the same immediately after
such transaction as it was immediately prior to such transaction, or
(4) during any period of two consecutive years, individuals who at the
beginning of such period constituted NTL's Board of Directors (together
with any new directors whose election or appointment by such board or whose
nomination for election by the shareholders of NTL was approved by a vote
of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute
a majority of NTL's Board of Directors then in office.
"Consolidated Interest Expense" means, for any person, for any period, the
amount of interest in respect of Indebtedness (including amortization of
original issue discount, amortization of debt issuance costs, and noncash
interest payments on any Indebtedness and the interest portion of any deferred
payment obligation and after taking into account the effect of elections made
under any Interest Rate Agreement, however denominated, with respect to such
Indebtedness), the amount of Redeemable Dividends, Restricted Subsidiary
Preferred Stock Dividends and the interest component of rentals in respect of
any capital lease obligation paid, in each case whether accrued or scheduled to
be paid or accrued by such person and its Subsidiaries (other than
Non-Restricted Subsidiaries) during such period to the extent such amounts were
deducted in computing Consolidated Net Income, determined on a consolidated
basis in accordance with GAAP. For purposes of this definition, interest on a
capital lease obligation shall be deemed to
33
<PAGE> 37
accrue at an interest rate reasonably determined by such person to be the rate
of interest implicit in such capital lease obligation in accordance with GAAP
consistently applied.
"Consolidated Net Income" means, with respect to any person for any period,
the aggregate of the Net Income of such person and its Subsidiaries (other than
Non-Restricted Subsidiaries) for such period, on a consolidated basis,
determined in accordance with GAAP; provided that
(1) the Net Income of any person that is not a Subsidiary or that is
accounted for by the equity method of accounting shall be included only to
the extent of the amount of dividends or distributions paid to the referent
person or a Wholly Owned Subsidiary,
(2) the Net Income of any person that is a Subsidiary (other than a
Subsidiary of which at least 80% of the Capital Stock having ordinary
voting power for the election of directors or other governing body of such
Subsidiary is owned by the referent person directly or indirectly through
one or more Subsidiaries) shall be included only to the extent of the
amount of dividends or distributions paid to the referent person or a
Wholly Owned Subsidiary,
(3) the Net Income of any person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded and
(4) the cumulative effect of a change in accounting principles shall be
excluded.
"Default" means any event that is or, with the passage of time or the
giving of notice or both, would be an Event of Default.
"Disqualified Stock" means any Capital Stock which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
on which the Convertible Notes mature.
"EBITDA" means, for any person, for any period, an amount equal to
(1) the sum of
(a) Consolidated Net Income for such period (exclusive of any
gain or loss realized in such period upon an Asset Sale), plus
(b) the provision for taxes for such period based on income or
profits to the extent such income or profits were included in computing
Consolidated Net Income and any provision for taxes utilized in
computing net loss under clause (i) hereof, plus
(c) Consolidated Interest Expense for such period, plus
(d) depreciation for such period on a consolidated basis, plus
(e) amortization of intangibles for such period on a consolidated
basis, plus
34
<PAGE> 38
(f) any other noncash item reducing Consolidated Net Income for
such period, minus
(2) all noncash items increasing Consolidated Net Income for such
period, all for such person and its Subsidiaries determined in accordance
with GAAP consistently applied.
"Excess Payment" means the excess of
(A) the aggregate of the cash and value of other consideration paid by
the Company or any of its Subsidiaries with respect to shares acquired in a
tender offer or other negotiated transaction over
(B) the market value of such acquired shares after giving effect to the
completion of a tender offer or other negotiated transaction.
"Exchange Rate Contract" means, with respect to any person, any currency
swap agreements, forward exchange rate agreements, foreign currency futures or
options, exchange rate collar agreements, exchange rate insurance and other
agreements or arrangements, or combination thereof, designed to provide
protection against fluctuations in currency exchange rates. An Exchange Rate
Contract may also include an Interest Rate Agreement.
"Existing Convertible Notes" means NTL's 7% Convertible Subordinated Notes
Due 2008.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession,
which are in effect on the Issuance Date.
"Global Notes" means the Rule 144A Global Notes.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Indebtedness" means, with respect to any person, any indebtedness of such
person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or representing the balance
deferred and unpaid of the purchase price of any property (including pursuant to
capital leases and sale-and-leaseback transactions) or representing any hedging
obligations under an Exchange Rate Contract or an Interest Rate Agreement,
except any such balance that constitutes an accrued expense or trade payable if
and to the extent any of the foregoing indebtedness (other than obligations
under an Exchange Rate Contract or an Interest Rate Agreement) would appear as a
liability upon a balance sheet of such person prepared in accordance with GAAP,
and
35
<PAGE> 39
also include to the extent not otherwise included, the Guarantee of items which
would be included within this definition.
"Interest Rate Agreement" means, for any person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement designed to protect the party indicated therein against
fluctuations in interest rates.
"Issuance Date" means the date on which the convertible notes are first
authenticated and issued.
"Material License" means a license to operate a cable or telephone system
held by NTL or any its Subsidiaries which system at the time of determination
covers a number of Net Households which equals exceeds 5% of the aggregate
number of Net Households covered by all of the licenses to operate cable
telephone systems held by NTL and its Subsidiaries at such time.
"Material Subsidiary" means
(1) NTL UK Group, Inc. (formerly known as OCOM Sub II, Inc.), NTL Group
Limited, CableTel Surrey, CableTel Cardiff Limited, CableTel Glasgow, CableTel
Newport and CableTel Kirklees and
(2) any other Subsidiary of the Company which is a "significant subsidiary"
as defined in Rule 1-02(w) of Regulation S-X under the Securities Act and the
Exchange Act (as such Regulation is in effect on the date of the Indenture).
"Net Income" means, with respect to any person for a specific period, the
net income (loss) of such person during such period, determined in accordance
with GAAP, excluding, however, any gain (but not loss) during such period,
together with any related provision for taxes on such gain (but not loss),
realized during such period in connection with any Asset Sale (as defined in the
Indenture) (including, without limitation, dispositions pursuant to
sale-and-leaseback transactions), and excluding any extraordinary gain (but not
loss) during such period, together with any related provision for taxes on such
extraordinary gain (but not loss).
"10% Notes" means NTL's 10% Series B Senior Notes Due 2007 outstanding at
any given time.
"12 3/4% Notes" means NTL's 12 3/4% Series A Senior Deferred Coupon Notes
Due 2005 outstanding at any given time.
"11 1/2% Deferred Coupon Notes" means NTL's 11 1/2% Series B Senior
Deferred Coupon Notes Due 2006 outstanding at any given time.
"10 3/4% Notes" means NTL's 10 3/4% Senior Deferred Coupon Notes Due 2008
and NTL's 10 3/4% Series B Senior Deferred Coupon Notes due 2008 outstanding at
any given time.
"9 3/4% Notes" means NTL's 9 3/4% Senior Deferred Coupon Notes Due 2008 and
NTL's 9 3/4% Series B Deferred Coupon Notes Due 2008 outstanding at any given
time.
36
<PAGE> 40
"9 1/2% Notes" means NTL's 9 1/2% Senior Notes Due 2008 and NTL's 9 1/2%
Series B Deferred Coupon Notes Due 2008 outstanding at any given time.
"11 1/2% Notes" means NTL's 11 1/2% Senior Notes Due 2008 and NTL's 11 1/2%
Series B Senior Notes Due 2008 outstanding at any given time.
"12 3/8% Notes" means NTL's 12 3/8% Senior Deferred Coupon Notes Due 2008
and NTL's 12 3/8% Series B Senior Deferred Coupon Notes Due 2008 outstanding at
any given time.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Designee" means
(1) a spouse or a child of a Permitted Holder,
(2) trusts for the benefit of a Permitted Holder or a spouse or child of a
Permitted Holder,
(3) in the event of the death or incompetence of a Permitted Holder, his
estate, heirs, executor, administrator, committee or other personal
representative or
(4) any person so long as a Permitted Holder owns at least 50% of the
voting power of all classes of the voting stock of such person.
"Permitted Holders" means George S. Blumenthal, J. Barclay Knapp and their
Permitted Designees.
"Pro Forma EBITDA" means for any Person, for any period, the EBITDA of such
Person as determined on a consolidated basis in accordance with GAAP
consistently applied after giving effect to the following:
(1) if, during or after such period, such Person or any of its
Subsidiaries shall have made any Asset Sale (as defined in the Indenture),
Pro Forma EBITDA of such Person and its Subsidiaries for such period shall
be reduced by an amount equal to the Pro Forma EBITDA (if positive)
directly attributable to the assets which are the subject of such Asset
Sale for the period or increased by an amount equal to the Pro Forma EBITDA
(if negative) directly attributable thereto for such period and
(2) if, during or after such period, such Person or any of its
Subsidiaries completes an acquisition of any Person or business which
immediately after such acquisition is a Subsidiary of such Person or whose
assets are held directly by such Person or a Subsidiary of such Person, Pro
Forma EBITDA shall be computed so as to give pro forma effect to the
acquisition of such Person or business; and provided further that, with
respect to NTL, all of the foregoing references to "Subsidiary" or
"Subsidiaries" shall be deemed to refer only to a "Restricted Subsidiary"
or "Restricted Subsidiaries" of NTL.
37
<PAGE> 41
"Redeemable Dividend" means, for any dividend with regard to Disqualified
Stock, the quotient of the dividend divided by the difference between one and
the maximum statutory federal income tax rate (expressed as a decimal number
between 1 and 0) then applicable to the issuer of such Disqualified Stock.
"Restricted Subsidiary" means any Subsidiary of NTL which is not a Non-
Restricted Subsidiary.
"Restricted Subsidiary Preferred Stock Dividend" means, for any dividend
with regard to preferred stock of a Restricted Subsidiary, the quotient of the
dividend divided by the difference between one and the maximum statutory federal
income tax rate (expressed as a decimal number between 1 and 0) then applicable
to the issuer of such preferred stock.
"Senior Debt" means the principal of, interest on and other amounts due on
(1) Indebtedness of NTL, whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed or guaranteed by NTL,
for money borrowed from banks or other financial institutions;
(2) Indebtedness of NTL, whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed or guaranteed by NTL in
compliance with the Indenture, including, without limitation, the Senior
Notes; and
(3) Indebtedness of NTL under interest rate swaps, caps or similar
hedging agreements and foreign exchange contracts, currency swaps or
similar agreements:
unless, in the instrument creating or evidencing or pursuant to which
Indebtedness under (1) or (2) is outstanding, it is expressly provided that such
Indebtedness is not senior in right of payment to the Convertible Notes. Senior
Debt includes, with respect to the obligations described in clauses (1) and (2)
above, interest accruing, pursuant to the terms of such Senior Debt, on or after
the filing of any petition in bankruptcy or for reorganization relating to NTL,
whether or not post-filing interest is allowed in such proceeding, at the rate
specified in the instrument governing the relevant obligation. Notwithstanding
anything to the contrary in the foregoing, Senior Debt shall not include:
(a) Indebtedness of or amounts owed by NTL for compensation to
employees, or for goods or materials purchased in the ordinary course of
business, or for services;
(b) Indebtedness of NTL to a Subsidiary of NTL; or
(c) the Existing Convertible Notes.
All references in this definition of "Senior Debt" to NTL shall also apply
to NTL Incorporated and NTL (Delaware), Inc.
"Senior Notes" means the 10% Notes, the 12 3/4% Notes, the 11 1/2% Deferred
Coupon Notes, the 10 3/4% Notes, the 9 3/4% Notes, the 9 1/2% Notes, the 11 1/2%
Notes and the 12 3/8% Notes.
38
<PAGE> 42
"Subsidiary" means any corporation, association or other business entity of
which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any person or one or more of the other
Subsidiaries of that person or a combination thereof.
"Wholly Owned Subsidiary" means, at any time, a Restricted Subsidiary all
of the Capital Stock of which (except directors' qualifying shares) is at the
time owned directly or indirectly by NTL.
39
<PAGE> 43
REGISTRATION RIGHTS
The following summary of selected provisions of the registration rights
agreement is not complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the registration rights agreement, which is
incorporated by reference into the registration statement of which this
prospectus forms a part.
NTL Communications Corp. entered into the registration rights agreement
pursuant to which it agreed, at its expense, for the benefit of the holders of
the offered securities to file with the Commission the registration statement
covering resale of the offered securities, by March 16, 1999. NTL Communications
Corp. will use its best efforts to cause the registration statement to become
effective as promptly as is practicable, but in any event by June 14, 1999, and
to keep the registration statement effective until the earlier of
(1) the sale pursuant to the registration statement of all the offered
securities registered thereunder and
(2) the expiration of the holding period applicable to such offered
securities held by persons that are not affiliates of NTL under Rule 144(k)
under the Securities Act, or any successor provision, subject to certain
permitted exceptions.
NTL Communications Corp. will be permitted to suspend the use of this
prospectus under certain circumstances relating to pending corporate
developments, public filings with the Commission and similar events. NTL
Communications Corp. agreed to pay predetermined liquidated damages as described
herein ("Liquidated Damages") to holders of offered securities if the
Registration Statement is not timely filed or made effective or if this
Prospectus is unavailable for periods in excess of those permitted above. Such
Liquidated Damages shall accrue until such failure to file or become effective
or unavailability is cured
(1) in respect of any convertible note, at a rate per annum equal to
0.25% for the first 90 day period after the occurrence of such event and
0.5% thereafter on an amount equal to the sum of the Issue Price of the
convertible note and
(2) in respect of each share of common stock, at a rate per annum equal
to 0.25% for the first 90 day period and 0.5% thereafter on the then
applicable conversion price for a share of common stock which equals the
Issue Price of $1,000 principal amount of convertible note divided by the
Conversion Rate in effect.
Selling securityholders must complete and deliver to us a notice and
questionnaire the form of which was sent to all holders of record known to us,
at least three business days prior to any intended distribution of offered
securities pursuant to the registration statement. Holders of offered securities
are required to complete and deliver the questionnaire prior to the
effectiveness of the registration statement so that such holders may be named as
selling securityholders in this prospectus at the time of effectiveness. Upon
receipt of such a completed questionnaire, together with such other information
as may be reasonably requested by us, from a selling securityholder following
the
40
<PAGE> 44
effectiveness of the registration statement, we will, as promptly as practicable
but in any event within five business days of such receipt, file such amendments
to the registration statement or supplements to this prospectus as are necessary
to permit such selling securityholder to deliver this prospectus, including any
supplements hereto, to purchasers of offered securities (subject to our right to
suspend the use of this prospectus as described above). We have agreed to pay
Liquidated Damages in the amount set forth above to holders of offered
securities if we fail to make such filing in the time required or, if such
filing is a post-effective amendment to the registration statement required to
be declared effective under the Securities Act, if such amendment is not
declared effective within 45 days of the filing thereof.
41
<PAGE> 45
UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a discussion of selected anticipated U.S. federal income
tax consequences of the purchase, ownership and disposition of the convertible
notes as of the date hereof. It deals only with convertible notes held as
capital assets by initial holders, and does not deal with special situations
including those that may apply to a particular holder such as exempt
organizations, dealers in securities, financial institutions, insurance
companies, persons who are not U.S. holders, and holders whose "functional
currency" is not the U.S. dollar, or special rules with respect to straddle or
"hedging transactions." The federal income tax considerations set forth below
are based upon the Internal Revenue Code of 1986, as amended and regulations,
rulings and judicial decisions thereunder as of the date hereof, and such
authorities may be repealed, revoked or modified (possibly retroactively) so as
to result in federal income tax consequences different from those discussed
below. As used herein, the term "U.S. holder" means a beneficial owner of a
convertible note that is for United States federal income tax purposes
(1) a citizen or resident of the United States,
(2) a corporation, partnership or other entity created or organized in
or under the laws of the United States or of any political subdivision
thereof,
(3) an estate or trust, described in Section 7701(a)(30) of the
Internal Revenue Code, or
(4) a person whose worldwide income or gain is otherwise subject to
United States federal income taxation on a net income basis.
Prospective investors are urged to consult their tax advisors regarding the
particular tax consequences of purchasing, holding and disposing of the
convertible notes or our common stock, including the tax consequences arising
under any state, local or foreign laws.
Payments of interest on convertible notes generally will be taxable to U.S.
Holders as ordinary interest income at the time such payments are accrued or
received (in accordance with the U.S. holder's method of accounting for federal
income tax purposes).
A U.S. holder will not recognize gain or loss upon conversion of the
convertible notes solely into our common stock (except with respect to cash
received in lieu of fractional shares, or any amounts attributable to accrued
and unpaid interest on the convertible notes, which will be treated as interest
for federal income tax purposes). The U.S. holder's basis in the common stock
received on conversion will be the same as such holder's adjusted tax basis in
the convertible notes at the time of conversion, and the holding period for the
common stock received on conversion will include the holding period of the
convertible notes that were converted.
42
<PAGE> 46
A U.S. holder will recognize gain or loss upon the sale, redemption or
other taxable disposition of the convertible notes in an amount equal to the
difference between such holder's adjusted tax basis in the convertible note and
the amount received therefor (other than amounts attributable to accrued and
unpaid interest on the convertible notes, which will be treated as interest for
federal income tax purposes). Such gain or loss generally will be long-term
capital gain or loss if the convertible notes were held for more than one year.
The conversion price of the convertible notes is subject to adjustment
under certain circumstances. Under Section 305 of the Internal Revenue Code and
the Treasury Regulations issued thereunder, adjustments or the failure to make
such adjustments to the conversion price of the convertible notes may result in
a taxable constructive distribution to U.S. holders of convertible notes,
resulting in ordinary income (subject to a possible dividends received deduction
in the case of corporate holders) to the extent of our current and accumulated
earnings and profits if, and to the extent that, certain adjustments in the
conversion price that may occur in limited circumstances (particularly an
adjustment to reflect a taxable dividend to holders of our common stock)
increase the proportionate interest of a U.S. holder of a convertible note
convertible into fully diluted common stock, whether or not the holders ever
convert the convertible notes. Generally, a U.S. holder's tax basis in a
convertible note will be increased by the amount of any such constructive
dividend.
We intend to take the position that the likelihood of paying Liquidated
Damages described under "Description of convertible notes -- registration
rights" is remote and that Liquidated Damages, if paid, would be taxable to a
U.S. holder of convertible notes as ordinary interest income in accordance with
such holder's method of accounting for income tax purposes. The Internal Revenue
Service may take a different position, however, which could affect the timing to
the U.S. holder's income with respect to Liquidated Damages.
The preceding discussion of certain United States federal income tax
consequences is for general information only and is not tax advice. Accordingly,
each investor should consult its own tax adviser as to particular tax
consequences to it of purchasing, holding, and disposing of the convertible
notes and our common stock, including the applicability and effect of any state,
local or foreign tax laws, and of any proposed changes in applicable laws.
43
<PAGE> 47
SELLING SECURITYHOLDERS
The following table sets forth, as of August 30, 2000, the respective
principal amount of convertible notes beneficially owned and offered hereby by
each selling securityholder, the common stock owned by each selling
securityholder and the common stock issuable upon conversion of such convertible
notes, which may be sold from time to time by such selling securityholder
pursuant to this prospectus. Such information has been obtained from the selling
securityholders.
The shares of common stock to be registered by this prospectus are
calculated on an "as converted" basis using the conversion rate in effect on the
date of this prospectus of 25.5102 shares of common stock per $1,000 principal
amount of convertible notes.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
AT MATURITY
OF DEBENTURES
BENEFICIALLY PERCENT OF TOTAL COMMON STOCK COMMON STOCK
OWNED AND OUTSTANDING OWNED PRIOR TO TO BE REGISTERED
SELLING SECURITY HOLDERS OFFERED HEREBY DEBENTURES ORIGINAL OFFERING HEREBY
------------------------ ---------------- ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Cede & Co...................... $167,603,000 100 % -- 4,275,586
</TABLE>
None of the selling securityholders listed above has, or within the past
three years has had, any position, office or other material relationship with us
or any of our predecessors or affiliates. Because the selling securityholders
may offer all or some portion of the above referenced securities pursuant to
this prospectus or otherwise, no estimate can be given as to the amount or
percentage of such securities that will be held by the selling securityholders
upon termination of any such sale. In addition, the selling securityholders
identified above may have sold, transferred or otherwise disposed of all or a
portion of such securities since August 30, 2000 in transactions exempt from the
registration requirements of the Securities Act. The selling securityholders may
sell all, part or none of the securities listed above.
Generally, only selling securityholders identified in the foregoing table
who beneficially own the offered securities set forth opposite their respective
names may sell such offered securities pursuant to the registration statement,
of which this prospectus forms a part. We may from time to time include
additional selling securityholders in supplements to this prospectus.
44
<PAGE> 48
PLAN OF DISTRIBUTION
The offered securities are being registered to permit public secondary
trading of such securities by the holders thereof from time to time after the
date of this prospectus. Neither NTL Incorporated, NTL (Delaware), Inc. nor NTL
Communications Corp. will receive any of the proceeds from the sale by the
selling securityholders of the offered securities. NTL Communications Corp. will
bear all fees and expenses incident to its obligation to register the offered
securities.
The selling securityholders may sell all or a portion of the offered
securities beneficially owned by them and offered hereby from time to time
directly through one or more underwriters, broker-dealers or agents. If the
offered securities are sold through underwriters or broker-dealers, the selling
securityholder will be responsible for underwriting discounts or commissions or
agent's commissions. Such offered securities may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices.
Such sales may be effected in transactions (which may involve crosses or block
transactions)
(1) on any national securities exchange or quotation service on which
the offered securities may be listed or quoted at the time of sale
(including the Nasdaq National Market for the common stock),
(2) in the over-the-counter market, or
(3) through the writing of options (whether such options are listed on
an options exchange or otherwise).
In connection with sales of the offered securities or otherwise, the
selling securityholder may enter into hedging transactions with broker-dealers,
which may in turn engage in short sales of the offered securities in the course
of hedging in positions they assume. The selling securityholder may also sell
offered securities short and deliver offered securities to close out short
positions, or loan or pledge offered securities to broker-dealers that in turn
may sell such offered securities. If the selling securityholders effect such
transactions by selling offered securities to or through underwriters, broker-
dealers or agents, such underwriters, brokers, dealers or agents may receive
commissions in the form of discounts, concessions or commissions from the
selling securityholders or commissions from purchasers of offered securities for
whom they may act as agent or to whom they may sell as principal (which
discounts, concessions or commissions as to particular underwriters,
brokers-dealers or agents may be in excess of those customary in the types of
transactions involved).
The outstanding common stock of NTL Incorporated is listed for trading on
the Nasdaq National Market under the symbol "NTLI." We do not intend to apply
for listing of the convertible notes on any securities exchange or for quotation
through the National Association of Securities Dealers Automated Quotation
System. Accordingly, no assurance can be given as to the development of
liquidity or any trading market for
45
<PAGE> 49
the convertible notes. See "Risk Factors--Lack of public market for the
convertible notes."
The selling securityholders and any broker-dealer participating in the
distribution of the offered securities may be deemed to be "underwriters" within
the meaning of the Securities Act, and any commissions paid, or any discounts or
concessions allowed to any such broker-dealer may be deemed to be underwriting
commissions or discounts under the Securities Act.
Under the securities laws of certain states, the offered securities may be
sold in such states only through registered or licensed brokers or dealers. In
addition, in certain states the offered securities may not be sold unless the
offered securities have been registered or qualified for sale in such state or
an exemption from registration or qualification is available and is complied
with.
There can be no assurance that any selling securityholder will sell any or
all of the convertible notes or offered securities registered pursuant to the
shelf registration statement, or which this Prospectus forms a part. In
addition, any securities covered by this Prospectus that qualify for sale
pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under Rule
144 or Rule 144A rather than pursuant to this Prospectus.
The selling securityholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M of the Exchange Act, which may limit the timing of purchases and sales of any
of the offered securities by the selling securityholders and any other such
person. Furthermore, Regulation M may restrict the ability of any person engaged
in the distribution of the offered securities to engage in market-making
activities with respect to the particular offered securities being distributed.
All of the foregoing may affect the marketability of the offered securities and
the ability of any person or entity to engage in market-making activities with
respect to the offered securities.
All expenses of the registration of the convertible notes and common stock
pursuant to the registration rights agreement will be paid by NTL Communications
Corp., including, without limitation, Commission filing fees and expenses of
compliance with state securities or "blue sky" laws; provided, however, that the
selling securityholders will pay all underwriting discounts and selling
commissions, if any. The selling securityholders will be indemnified by NTL
Communications Corp. against certain civil liabilities, including certain
liabilities under the Securities Act, or will be entitled to contribution in
connection therewith. The company will be indemnified by the selling
securityholders against certain civil liabilities, including certain liabilities
under the Securities Act, or will be entitled to contribution in connection
therewith.
Upon sale pursuant to the shelf registration statement, of which this
prospectus forms a part, the offered securities will be freely tradable in the
hands of persons other than affiliates of NTL Communications Corp.
46
<PAGE> 50
LEGAL MATTERS
The validity of the issuance of the convertible notes and the common stock
issuable upon conversion of the convertible notes will be passed upon for NTL
Communications Corp., NTL (Delaware), Inc. and NTL Incorporated by Skadden,
Arps, Slate, Meagher & Flom LLP, New York, New York, special counsel for NTL
Incorporated, NTL (Delaware), Inc. and NTL Communications Corp.
EXPERTS
The consolidated financial statements and schedules of NTL (Delaware), Inc.
(formerly NTL Incorporated), appearing in NTL (Delaware), Inc.'s Annual Report
on Form 10-K for the year ended December 31, 1999 have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given on the authority of such firm as experts in accounting and auditing.
The consolidated financial statements and schedules of NTL Communications
Corp. appearing in NTL Communication Corp.'s Annual Report on Form 10-K for the
year ended December 31, 1999 have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given on the authority of such
firm as experts in accounting and auditing.
The combined financial statements of CWC ConsumerCo as of March 31, 1998
and 1999 and for the three years ended March 31, 1999 incorporated by reference
in this prospectus have been audited by Arthur Andersen, Chartered Accountants,
as indicated in their report, and are incorporated by reference in this
prospectus in reliance upon the report of said firm as experts in giving said
report.
The consolidated financial statements of Cablecom Holdings AG as of
December 31, 1999 and 1998 and for each of the three years in the period ending
December 31, 1999 incorporated by reference in this prospectus have been so
included in reliance on the report of PricewaterhouseCoopers AG, independent
accountants, given on the said authority of said firm as experts in auditing and
accounting.
47
<PAGE> 51
ENFORCEABILITY OF CIVIL LIABILITIES
A substantial majority of our assets are located outside the United States.
As a result, it may not be possible for you to realize in the United States upon
judgments of courts of the United States predicated upon the civil liability
under the federal securities laws of the United States. The United States and
England do not currently have a treaty providing for the reciprocal recognition
and enforcement of judgments, other than arbitration awards, in civil and
commercial matters. Therefore, a final judgment for the payment of a fixed debt
or sum of money rendered by any United States court based on civil liability,
whether or not predicated solely upon the United States federal securities laws,
would not automatically be enforceable in England. In order to enforce in
England a United States judgment, proceedings must be initiated by way of common
law action before a court of competent jurisdiction in England. An English court
will, subject to what is said below, normally order summary judgment on the
basis that there is no defense to the claim for payment and will not
reinvestigate the merits of the original dispute. In such an action, an English
court will treat the United States judgment as creating a valid debt upon which
the judgment creditor could bring an action for payment, as long as
(1) the United States court had jurisdiction over the original proceeding,
(2) the judgment is final and conclusive on the merits,
(3) the judgment does not contravene English public policy,
(4) the judgment must not be for a tax, penalty or a judgment arrived at by
doubling, trebling or otherwise multiplying a sum assessed as
compensation for the loss or damage sustained and
(5) the judgment has not been obtained by fraud or in breach of the
principles of natural justice.
Based on the foregoing, there can be no assurance that you will be able to
enforce in England judgments in civil and commercial matters obtained in any
United States court. There is doubt as to whether an English court would impose
civil liability in an original action predicated solely upon the United States
federal securities laws brought in a court of competent jurisdiction in England.
48
<PAGE> 52
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
NTL Incorporated, NTL (Delaware), Inc. and NTL Communications Corp. each is
currently subject to the informational requirements of the Securities Exchange
Act of 1934, as amended. We each file reports, proxy statements, information
statements and other information with the Commission under the Exchange Act. You
can inspect and copy any reports, proxy statements, information statements and
other information we file with the Commission at the public reference facilities
the Commission maintains at:
Room 1024, Judiciary Plaza,
450 Fifth Street, N.W.,
Washington, D.C. 20549,
and at the Commission's Regional Offices located at:
Suite 1400, Northwestern Atrium Center,
500 West Madison Street,
Chicago, Illinois 60661
and
13th Floor, Seven World Trade Center,
New York, New York 10048,
and you may also obtain copies of such material by mail from the Public
Reference Section of the Commission at:
450 Fifth Street, N.W.,
Washington, D.C. 20549,
at prescribed rates.
The Commission also maintains a site on the World Wide Web, the address of
which is http://www.sec.gov. That site also contains our reports, proxy and
information statements and other information. Reports, proxy statements and
other information concerning the Company may also be inspected at the offices of
the Nasdaq Stock Market, Reports Section, at:
1735 K Street, N.W.,
Washington, D.C. 20006.
This prospectus is part of a registration statement filed by us with the
Commission. It does not contain all the information included or incorporated in
the registration statement. The full registration statement can be obtained from
the Commission as indicated above or from us.
The Commission allows us to incorporate by reference some information about
NTL Incorporated and NTL Communications Corp. that we file with the Commission.
This allows us to disclose important information to you by referencing those
filed documents. Any information that we reference this way is considered part
of this prospectus.
49
<PAGE> 53
The following documents filed by us with the Commission are incorporated by
reference into this prospectus:
(a) NTL (Delaware), Inc.'s Annual Report on Form 10-K for the year
ended December 31, 1999, dated March 17, 2000, as amended by Form
10-K/A-1, dated August 29, 2000;
(b) NTL (Delaware), Inc.'s Quarterly Reports on Form 10-Q for the
quarter ended March 31, 2000, dated May 11, 2000 and for the
quarter ended June 30, 2000, dated August 10, 2000;
(c) NTL (Delaware), Inc.'s Current Reports on Form 8-K dated
January 6, 2000 (filed January 21, 2000),
January 25, 2000 (filed January 25, 2000),
February 4, 2000 (filed February 10, 2000),
February 15, 2000 (filed February 16, 2000),
February 17, 2000 (filed February 22, 2000),
March 16, 2000 (filed March 29, 2000),
March 16, 2000 (filed May 10, 2000),
April 27, 2000 (filed April 27, 2000),
May 4, 2000 (filed May 4, 2000),
May 10, 2000 (filed May 16, 2000),
May 18, 2000 (filed May 19, 2000),
August 3, 2000 (filed August 7, 2000), and
August 7, 2000 (filed August 10, 2000);
(d) NTL (Delaware), Inc.'s Definitive Proxy Statement on Schedule 14A
dated February 11, 2000;
(e) NTL (Delaware), Inc.'s Definitive Proxy Statement on Schedule 14A
dated April 27, 2000;
(f) NTL Incorporated's Quarterly Report on Form 10-Q for the quarter
ended June 30, 2000, dated August 10, 2000
(g) NTL Incorporated's Current Reports on Form 8-K dated
May 17, 2000 (filed May 30, 2000, as amended July 13, 2000 and
August 25, 2000, and August 30, 2000).
May 18, 2000 (filed May 19, 2000),
May 30, 2000 (filed May 30, 2000),
August 3, 2000 (filed August 7, 2000), and
August 4, 2000 (filed August 10, 2000);
(h) NTL Incorporated's Preliminary Proxy Statement on Schedule 14A
dated June 30, 2000;
(i) NTL Communication Corp.'s Annual Report on Form 10-K for the year
ended December 31, 1999, dated March 27, 2000;
(j) NTL Communication Corp.'s Quarterly Reports on Form 10-Q for the
quarter ended March 31, 2000, dated May 12, 2000 and for the
quarter ended June 30, 2000, dated August 10, 2000;
(k) NTL Communication Corp.'s Current Reports on Form 8-K dated
January 25, 2000 (filed January 25, 2000),
50
<PAGE> 54
February 4, 2000 (filed February 10, 2000),
February 15, 2000 (filed February 16, 2000); and
(l) NTL Communication Corp.'s Form 8-B dated October 14, 1993 (filed on
October 18, 1993), with a description of the common stock and
associated rights.
We are incorporating by reference the documents listed above and any
current reports and proxy statements we file with the commission until the end
of the exchange offer. Any information incorporated by reference this way will
automatically be deemed to update and supersede this information.
We will provide you without charge on your request, a copy of any or all
documents which are incorporated by reference to this prospectus, except for
exhibits which are specifically incorporated by reference into those documents.
You should make your request in writing or by telephone to:
NTL Incorporated
110 East 59th Street
26th Floor
New York NY 10022
Attention: Richard J. Lubasch
Tel: (212) 906-8440
51
<PAGE> 55
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[NTL LOGO GRAPHIC]
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
